Stock market dips to over one-week closing low; blue chips fall

Reuters: Shares closed at their lowest in more than a week on Friday as investors sold large-cap shares such as Ceylon Tobacco Company Plc and Conglomerate John Keells Holdings Plc amid subdued sentiment.

The Colombo stock index ended down 0.2% at 6,324.10, its lowest close since 1 December. The index was largely flat for the week after recording a 1.2% gain last week, its first weekly gain in four. Turnover was Rs. 622.1 million ($4.18 million), compared with this year’s daily average of Rs. 748.3 million.

Foreign investors bought a net Rs. 29.3 million worth of shares on Friday, raising the year-to-date net foreign inflow to Rs. 1.03 billion in shares.

Investors continue to be concerned that proposed increases in various taxes and fees would reduce disposable income and challenge consumption-led growth.

“Overall market came down with some selling pressure on the blue chips,” said Dimantha Mathew, Head of Research at First Capital Equities Ltd.

“We continue to see volatility with continued uncertainty, no clear direction and uncertainty over budget proposals. We don’t expect market to turn around as most of people will be going on leave from next week,” Mathew said.

Sri Lankan markets will be closed on Monday and Tuesday for a holiday and will resume trading on Wednesday.

The Government aims to boost its 2017 tax revenue by 27% to Rs. 1.82 trillion year-on-year to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

Brokers said investors were concerned about the sustainability of rates after the Central Bank on Tuesday kept key rates unchanged.

Shares of John Keells Holdings Plc fell 0.7% while the Ceylon Tobacco Company Plc fell 2.7%.