Stock market falls for 6th straight session

Tuesday, 22 November 2016 00:27 - - {{hitsCtrl.values.hits}}

Reuters: Shares fell for a sixth straight session on Monday, posting their lowest close in four and a half months, in 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 0.8%, or 50.85 points, at 6,275.26, its lowest close since 5 July. It has declined 2.27% over the past six sessions after the budget was presented on 10 November.

The index was in oversold territory, with the 14-day relative strength index at 18.405 versus Friday’s 23.399, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

“Confidence levels are very low and selling pressure is starting to increase with continued foreign selling,” said Dimantha Mathew, head of research, First Capital Equities Ltd.

“No catalyst at the moment to reverse the trend amid global worries.”

Analysts said some of the budget proposals were still unclear, and there were concerns that some of them could be reversed like last year.

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. 47.98 million ($ 324,298.75) of shares on Monday, extending the year-to-date net foreign outflow of 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. 395.4 million, well below this year’s daily average of Rs. 700.8 million.

Shares of conglomerate John Keells Holdings Plc fell 1.16%, while Asiri Hospital Holdings Plc dropped 5.54%.

Shares of Sampath Bank Plc fell 1.88%, while Sri Lanka Telecom Plc dropped 1.41%.