Reuters: Shares closed weaker for the fourth straight session on Monday, weighed down by foreign sell-offs and profit-taking in construction shares, while the rupee ended steady.
The benchmark stock index closed down 0.75% at 6,103.63, its lowest since 26 November. The bourse fell 1% last week, but is up 1.61% for the year.
The index touched its highest level since 25 June 2018 on 2 December, lifted by hopes of booming economic activity after the new government cut some key taxes.
The rupee ended steady at 181.10/30 per dollar, Refinitiv data showed. It is up 0.8% so far this year.
Analysts said the tax reduction has already been factored in and the market was waiting to see the impact of the new policy. They said investors sold shares that rose on hopes the new Government will encourage an economic boom led by construction.
“We see a profit taking in construction sector shares, which jumped on construction boom hopes,” said Atchuthan Srirangan, assistant research manager at First Capital Holdings PLC. “There was no negative news and when investors see in values in shares, they will come again and buy.”
The Government on 27 November reduced value-added tax to 8% from 15% effective 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.
Singapore-based research firm Emerging Asia Economics in a note last week said 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 sellers on Monday in the equity market for the 28th session out of the last 31.
They sold a net Rs. 141 million ($783,333) worth of shares on Monday, extending the year-to-date foreign outflow to Rs. 11 billion, according to index data.
Equity market turnover was Rs. 435.5 million, less than this year’s daily average of about Rs. 726 million. Last year’s daily average was Rs. 834 million.
Foreign investors were net sellers of government securities on a net basis for the first week in seven, selling a net Rs. 4.2 billion worth of government securities in the week ended 4 December.
Total foreign outflows from government securities through 27 November stood at Rs. 47.9 billion, according to Central Bank data.