Reuters: Shares on Thursday ended at their lowest closing level in more than four months, on thin volume 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 Rs. 1.82 trillion ($ 12.36 billion) 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 0.07% at 6,344.28, its lowest close since 7 July.

The index fell for a fourth straight session and was in the oversold territory, with the 14-day relative strength index at 25.714 versus Wednesday’s 26.347, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

“Investors are very cautious after the budget and the U.S. elections,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities Ltd.

“Investors are expecting some positive news to move.”

Analysts said these budget proposals are still unclear, and there are concerns that some of them could be reversed, like what occurred last year.

Foreign investors bought Rs. 12.1 million worth of shares on Thursday. But they have sold a net Rs. 1.08 billion of shares so far this year.

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

Turnover was Rs. 248.5 million ($ 1.68 million), well below a half of this year’s daily average of Rs. 704.3 million.

Shares of conglomerate John Keells Holdings Plc dropped 1.02%, while Ceylinco Insurance Plc fell 2.99% and Ceylon Tobacco Company Plc dipped 0.57%.

Rupee closes little changed amid capital outflow worries

Reuters: The rupee ended little changed on Thursday amid persistent worries about capital outflows as incoming President Donald Trump’s policies are seen aiding higher US interest rates and a stronger greenback, while dollar selling by a state-run bank helped to boost sentiment.

The dollar index, which measures the greenback’s strength against a basket of major currencies, touched a near 14-year high on Wednesday.

Rupee forwards were active, with spot-next trading at 148.80/90 per dollar intraday before the state-run bank sold dollars at 148.75. They ended at 148.65/75 per dollar, compared with Wednesday’s close of 148.60/80.

One-week forwards were at 148.60/80 per dollar, compared with the previous close of 148.80/149.00.

Exporters were reluctant to sell dollars due to global concerns and uncertainties within the Sri Lankan market following the national budget, dealers said.

Foreign investors might pull out of emerging markets, including Sri Lanka, if the Fed is on course to raise interest rates next month, they added.

“There was (dollar) demand, but we have seen some selling after the state bank sold dollars at 148.75 in early trade,” said a currency dealer requesting anonymity.

The rupee was also under pressure as foreign investors exited government securities due to new taxes proposed in the budget, dealers said.

The national budget has proposed to revise corporate and withholding taxes to boost revenue and cut the 2017 fiscal deficit.

Foreign investors net sold government securities of Rs. 34.2 billion ($ 231.08 million) in the four weeks ended 9 November, data from the Central Bank showed.