Stock market decline persists on budget worries

Wednesday, 2 December 2015 00:45 -     - {{hitsCtrl.values.hits}}

Reuters - Sri Lankan shares fell for a fifth straight session on Tuesday to their eight-month closing low, led by diversified and telecommunications stocks on worries earnings of financial firms would fall after the new budget proposals announced were implemented.

The main stock index ended 0.2%, or 13.96 points, weaker at 6,895.19, its lowest close since March 31.

The index closed just above its oversold territory with the 14-day Relative Strength Index at 30.676 versus Monday’s 32.095, Reuters data showed. 

A level of 30 or below indicates the market is oversold.

“Still we see the post-budget impacts on the market,” said Yohan Samarakkody, head of research at SC Securities (Pvt) Ltd.

“The good thing is we see the foreign investors are slowly entering the market.”

Sri Lanka’s consumer prices in November rose to a 10-month high of 3.1% from a year earlier, the Department of Census and Statistics said on Monday.

Rating agency Fitch said on Tuesday that Sri Lanka’s 2016 budget provides no clear plan for fiscal consolidation over the medium term and the absence of such a framework will put more pressure on the fiscal deficit.

“Fitch believes there are risks to government being able to meet its fiscal deficit target, especially considering the trend in revenues in recent years,” the rating agency said.

The government on Nov. 20 announced a raft of steps, including the removal of a 0.3% share transaction levy, to stimulate trading in the share market and increase liquidity.

Shares of Carson Cumberbatch Plc fell 2.61%, while Dialog Axiata Plc dropped 1.87%.

Turnover was 509.2 million rupees ($3.56 million), half of this year’s daily average of 1.1 billion rupees.

Foreign investors, who have been net sellers of 3.57 billion rupees worth of shares so far this year, bought a net 195.5 million rupees worth of equities on Tuesday.