Bourse recovers from 2-month closing low as large caps gain

Tuesday, 28 November 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares ended marginally higher on Monday in dull trade, recovering from a near two-month closing low hit in the previous session, even as investors awaited clarity on new taxes and key legislations.

The Colombo stock index ended 0.05% firmer at 6,417.15, edging up from its lowest close since 26 September hit on Friday. The index fell 1.1% last week, but is still up 3% in the year so far. Turnover stood at Rs. 342.7 million ($ 2.23 million) on Monday, around a third of this year’s average.

“Investors are on wait-and-see approach with continued political uncertainty,” said Atchuthan Srirangan, senior research analyst, First Capital Holdings Plc.

“The good sign is that the foreign participation is high.”

Foreign investors net bought equities worth Rs. 42.9 million on Monday, extending the year-to-date net foreign inflow to Rs. 18.4 billion worth of stocks.

Shares in Ceylon Tobacco Company Plc rose 2.1%, while Lion Brewery Plc ended 2.3% up and Hatton National Bank Plc ended 0.7% firmer, pushing the overall index up.

Analysts said political worries over delay in local government polls and a lack of clarity over budget and two other key policy measures continued to weigh on sentiment.

A court on Wednesday issued a stay order on a legislation that cleared the island nation’s Election Commission to hold local government polls in which the coalition partners of the government have decided to contest separately.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in the 2018 Budget presented earlier this month, with the final budget vote scheduled for 9 December.

Analysts said market participants have sought more clarity on these taxes and that there could be some amendments to these proposals before the final vote.

The Government also released gazette notifications on the Inland Revenue Act and the Exchange Control Act, with investors waiting for clarification on the new legislations.