Stock market down to near one-week closing low

Reuters: Shares ended weaker for a second straight session on Wednesday, to hit their lowest close in nearly one week, with foreign investors selling domestic shares as uncertainty over budget proposals continued to keep sentiment subdued.

The Colombo stock index ended down 0.36% at 6,327.30, moving away from its highest close since 15 November hit on Monday. The Bourse gained 1.17% last week, recording its first weekly gain in four weeks.

Foreign investors sold a net Rs. 105.6 million ($ 711,590.30) worth of shares on Wednesday extending the year-to-date net foreign outflow to Rs. 1.9 billion worth of shares.

Turnover was Rs. 830.1 million, compared with this year’s daily average of Rs. 699.03 million.

Despite recent gains, investors are concerned that proposed increases in various taxes and fees would reduce disposable income and challenge consumption-led growth.

“Market is moving sideways as there is no clear direction and not much of retail (investor) participation,” said Dimantha Mathew, head of research, First Capital Equities Ltd.

“The positive sentiment was short-lived and uncertainty over budget proposals and lack of positive sentiments very bad for investor climate.”

The Government aims to boost its 2017 tax revenue by 27% to Rs. 1.82 trillion year-on-year to meet a commitment given to the International Monetary Fund in return for a $ 1.5 billion loan in May. Brokers said investors were concerned about the sustainability of rates after the Central Bank on Tuesday kept key rates unchanged.

Shares of Colombo Cold Stores Plc fell 1.12% while the biggest-listed lender Commercial Bank of Ceylon Plc ended steady.