Shares fall on profit-taking

Reuters: Stocks fell to a near one-week closing low on Wednesday as investors booked profits in diversified and telecom shares while concerns over a proposed tax bill weighed on overall investor sentiment.

The Colombo stock index ended 0.36% down at 6,709.76, its lowest close since 29 June. The Bourse hit an 18-month high and climbed 0.47% last week.

However, foreign investors net bought Rs. 56.1 million ($ 365,353.31) worth of shares on Wednesday, extending their year-to-date net inflows to Rs. 22.5 billion worth of equities.

Gross foreign buying accounted for around 77% of the day’s turnover of Rs. 854.7 million, which was less than this year’s daily average of Rs. 922.4 million.

“Foreigners are running the show and taking the bulk of the turnover. The local participation is low due to uncertainty over taxes,” said Dimantha Mathew, head of research, First Capital Holdings Plc.

Brokers said local investors have been waiting for some clarity on the proposed Inland Revenue legislation, which some companies expect will result in a higher cost of production.

The IMF, which has long urged Sri Lanka to boost tax revenue through modernisation and simplification of its fiscal system, has urged the Government to submit to Parliament a new Inland Revenue Act.

Shares of Carson Cumberbatch Plc lost 7.7% while Dialog Axiata Plc fell 1.7%, Conglomerate John Keells Holdings Plc fell 0.5% and Sri Lanka Telecom Plc ended 1.9% weaker.