Stock market edges down on profit-taking

Reuters - shares closed slightly lower on Tuesday after posting a more than 11-week closing high in the previous session, as investors booked profits in beverage stocks and foreign investors trimmed their holdings.

Foreign investors offloaded a net Rs. 89.85 million ($ 617,950.48) worth of shares in their first selling in three sessions, extending the net foreign outflow so far this year to Rs. 3.35 billion worth of equities.

The fall seems to be a small downturn with some profit-taking after the recent uptrend, said Dimantha Mathew, head of research, First Capital Equities Ltd.

“The overall investor sentiment is quite bullish and it is getting better day by day.”

Investors expected the country’s economic fundamentals to improve after the Central Bank on 28 July surprised the markets with a 50-basis point hike in its main interest rates aimed at curbing stubbornly high credit growth.

The benchmark Colombo stock index ended 0.07%, or 4.65 points, weaker at 6,577.95.

Turnover stood at Rs. 851.7 million, more than this year’s daily average of around Rs. 732.1 million.

Shares of Ceylon Tea Services Plc fell 12.56%, while Carson Cumberbatch Plc dropped 1.37%.

Analysts said investors also largely shrugged off a Supreme Court order asking the Parliament to stop considering a bill to raise the value-added tax as the draft had not followed due process.

The move could put in jeopardy the government’s ambitious fiscal consolidation plan to reduce the budget deficit to 5.4% of gross domestic product from last year’s 7.4%.