Reuters: Shares extended their falls into a seventh session on Tuesday, posting their lowest close since 4 July, 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 (then $ 12.35 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 0.31%, or 19.28 points, at 6,255.98. It has declined 2.57% over the past seven sessions after the budget was presented on 10 November.

The index was in oversold territory, with the 14-day relative strength index at 16.929 versus Monday’s 18.405, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

“Investors stayed on the sidelines while the economy is getting squeezed and earnings are taking a hit,” said Yohan Samarakkody, head of research, SC Securities Ltd.

The market was also hit by continued foreign investor selling following Donald Trump’s win in US president election, he added.

The market shrugged off a move by the Securities and Exchange Commission to change the minimum floating rule to raise market liquidity.

Foreign investors sold a net Rs. 8.76 million ($ 59,189.19) of shares on Tuesday, extending the year-to-date net foreign outflow to Rs. 1.16 billion of shares.

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. 649 million, less than this year’s daily average of Rs. 700.6 million.

Shares of DFCC Bank Plc fell 1.64%, while Lanka ORIX Leasing Company Plc declined 2.56%.

Rupee slips on importer dollar demand

Reuters - The rupee ended slightly weaker on Tuesday due to dollar demand from importers on fears that US President-elect Donald Trump’s policies would lead to a rise in rates and the greenback.

Foreign investors might pull out of emerging markets, including Sri Lanka, if the Fed raises interest rates next month, dealers said.

Rupee forwards were active, with spot-next forwards ending at 148.60/70 per dollar, compared with Monday’s close of 148.55/65.

“The pressure was there today, (importer) demand was also there and not lot of conversions happened,” said a currency dealer requesting anonymity.

The International Monetary Fund (IMF) released the second tranche of loan worth $ 162.6 million under its $ 1.5 billion loan program, and said the country’s macro-economic and financial conditions had begun to stabilise.

The pressure on the rupee is now expected to ease with investors awaiting actions from the Central Bank after the IMF loan money flows in, dealers said.

The Central Bank on Friday revised the spot rupee reference rate to 147.95 per dollar from 147.75.

The spot rupee was hardly traded on Tuesday, but was quoted at 148.00/149.00.

The rupee has been under pressure as exporters were reluctant to sell dollars due to global concerns and uncertainties in the Sri Lankan market following the national budget, which has proposed a revision in corporate and withholding taxes.

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

Foreign investors net sold government securities worth Rs. 37.12 billion ($ 250.81 million) in the five weeks ended on 16 November, data from the Central Bank showed.