REUTERS: Shares closed nearly unchanged yesterday, hovering near a 17-month high hit in the previous session, while the rupee ended weaker on concerns related to government coffers following recent tax cuts. The benchmark stock index closed largely unchanged at 6,214.99. The Bourse gained 1.5% last week, and is up 2.69% for the year.
The rupee fell 0.14% to 181.50/65 per dollar, compared to Friday’s close of 181.25/35, Refinitiv data showed. It is up 0.6% so far this year.
The Government reduced value-added tax to 8% from 15% from 1 December, and abolished some other taxes as well in its attempt to boost economic growth that has fallen to a near two-decade low.Emerging Asia Economics said in a note on Monday that the tax cut decision would provide a significant boost to the economy, but put increased strain on the country’s fragile public finances with a possible loss of $ 2 billion in revenue.
Foreign investors were net buyers in the equity market for the second time in six sessions yesterday, after being net sellers for 24 sessions out of 26. They bought a net Rs. 81.6 million ($ 453,333) worth of shares yesterday, but the market has suffered a net foreign outflow of Rs. 10.6 billion worth of equities so far this year, according to index data.
Equity market turnover was Rs. 946.6 million, more than this year’s daily average of about Rs. 726 million. Last year’s daily average was Rs. 834 million.
Foreign investors were net buyers of government securities on a net basis for the sixth straight week, purchasing a net Rs. 4.3 billion worth of government securities in the week ended 27 November.
Total foreign outflows from government securities through 27 November stood at Rs. 43.7 billion, according to Central Bank data.