Bourse edges down despite heavy foreign buying

Wednesday, 22 November 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares ended slightly weaker on Tuesday, led lower by large cap Ceylon Tobacco Company , but heavy buying by foreign investors in blue chips capped the decline.

Local retail investors, however, stayed on the sidelines due to a lack of fresh triggers amid expectations certain amendments in the Budget could help boost sentiment, analysts said.

The Colombo stock index ended 0.23% lower at 6,458.73. It lost 1% last week.

Ceylon Tobacco Company fell 4.6%.

“Still, the foreign demand is there and we expect the same trend to continue this year,” said Hussain Gani, Deputy CEO at Softlogic Stockbrokers.

The final Budget vote is scheduled for 9 December and the market expects some amendments that could help give it some direction.

Foreign investors net bought equities worth Rs. 70 million ($ 455,285) on Tuesday, extending the net foreign inflow to Rs. 19.7 billion so far this year.

Foreign buying accounted for 85% of the day’s turnover of Rs. 1.58 billion, more than this year’s average of around Rs. 955.4 million. Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues, as the Budget deficit for the current year slipped to 5.2% of the gross domestic product.

Samaraweera imposed taxes on telecom towers and text messages, and introduced a debt repayment levy of 20 cents per 1,000 rupee bank transaction with effect from 1 April next year.

Analysts said the market players have sought more clarification on these taxes and perhaps there could be amendments to these proposals before the final vote.

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