Stock market falls for 8th session; tax proposals weigh

Thursday, 24 November 2016 00:01 - - {{hitsCtrl.values.hits}}

Reuters: Shares extended falls to an eighth session on Wednesday, posting their lowest close since 7 April, as investor sentiment was hit by budget tax proposals, including revisions in corporate and withholding taxes.

The government aims to boost its 2017 tax revenue by 27% to 1.82 trillion rupees year-on-year, and meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

The benchmark index of the Colombo Stock Exchange ended down 0.21% at 6,242.68. It has fallen 2.77% over the past eight sessions after the budget was presented on 10 November.

The index was in oversold territory, with the 14-day relative strength index at 15.978 versus Tuesday’s 16.929, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

“Market is down in low trade as investors are on wait-and-see mode,” said Dimantha Mathew, head of research at First Capital Equities Ltd.

Foreign investors sold a net 100.7 million rupees ($678,571.43) worth of shares on Wednesday, extending the year-to-date net foreign outflow to 1.27 billion rupees.

Analysts said the increase in various taxes and fees would reduce disposable income and challenge consumption-led growth.

Turnover was 284.9 million rupees, well below this year’s daily average of 698.6 million rupees.

Shares of Lion Brewery Plc fell 6.81%, while Hemas Holdings Plc declined 5.00% and Ceylon Tobacco Company Plc fell 1.24.