Thursday, 29 January 2015 01:20
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Reuters: Shares hit a near two-week closing high on Wednesday, a day ahead of the new Government’s supplementary budget, on hopes of strong corporate earnings after the Government implements its promised concessions and tax reductions on key commodities through the budget.
President Maithripala Sirisena’s administration will announce its first budget on Thursday and Finance Minister Ravi Karunanayake told Reuters on Monday that the Government aims to fulfil its election pledges, including tax cuts and salary hikes.
The main stock index ended up 0.38%, or 27.64 points, at 7,395.29, its highest close since 16 January. It hit a one-month closing low on Friday.
“The market was driven by speculation on the budget, especially on the expectation of gas price reduction which has a direct impact on the manufacturing sector,” said Dimantha Mathew, Research Manager at First Capital Equities Ltd.
“The budget is expected give a boost to disposable income as they are looking at reduction of taxes on essential goods and increase in salaries. All in all, this will boost disposable income.”
The index also gained after the Central Bank kept key policy rates steady on Tuesday saying inflation is expected to ease further, though the market had expected some tightening.
Some analysts said investors are still waiting for clarity on the Government’s policies.
Turnover was Rs. 1.3 billion, the highest since 13 January but less than last year’s daily average of Rs. 1.42 billion, exchange data showed.
Foreign investors were net buyers of Rs. 370.4 million ($2.80 million) worth of shares on Wednesday, but they have been net sellers of Rs. 453.6 million worth of shares so far this month. They bought a net Rs. 22.07 billion worth of stocks last year.
Shares of Lion Brewery Plc rose 5.2%, while Hemas Holdings Plc gained 1.12%.
