Sri Lankan shares hit four-month closing low in thin trade

Reuters: Sri Lankan shares on Thursday ended at their lowest closing level in more than four months, on 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 percent to 1.82 trillion rupees ($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 0.07 percent at 6,344.28, its lowest close since July 7.

The index fell for a fourth straight session and was in the oversold territory, with the 14-day relative strength index at 25.714 versus Wednesday's 26.347, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

"Investors are very cautious after the budget and the U.S. elections," said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

"Investors are expecting some positive news to move."

Analysts said these budget proposals are still unclear, and there are concerns that some of them could be reversed, like what occurred last year.

Foreign investors bought 12.1 million rupees worth of shares on Thursday. But they have sold a net 1.08 billion rupee of shares so far this year.



Analysts said the increase in various taxes and fees would reduce the disposable income of people and challenge the consumption-led growth.

Turnover was 248.5 million rupees ($1.68 million), well below a half of this year's daily average of 704.3 million rupees.

Shares of conglomerate John Keells Holdings Plc dropped 1.02 percent, while Ceylinco Insurance Plc fell 2.99 percent and Ceylon Tobacco Company Plc dipped 0.57 percent.

($1 = 147.7500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

Colombo Stock Exchange Market Review – 17th Nov 2016

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Colombo Stock Exchange Trade Summary 17-Nov-2016

Colombo Equities ended Thursday’s session in red, extending its post-budget losing streak to four sessions. ASI closed at 6,344.28 down by 4.75 index points (-0.1%) in a session marked by thin volumes and the S&P SL 20 index declined by 4.82 points (-0.1%) to 3,527.10.

Price appreciations in Lion Brewery (LKR 485.00,+7.8%) and Commercial Bank (LKR 143.00,+1.4%) failed to lift the index performance and the index edged lower driven by the price dip in John Keells Holdings (LKR 145.00,-1.4%), Ceylon Tobacco (LKR 870.00,-0.6%) and Nestle Lanka (LKR 2,050.00,-0.8%).

Market turnover reached LKR 284mn supported by activity in John Keells Holdings (LKR 50mn), Asiri Hospitals (LKR 47mn) and Hatton National Bank – nonvoting (LKR 19mn). No crossings were reported today.

Losers outweighed the gainers 83 to 36 reflecting the overall bearish sentiments. Most of the activity was concentrated around John Keells Holdings, Access Engineering and First Capital Holdings.

Access Engineering share price dropped 0.8% in todays’ trading session amid the concern on the increase in corporate tax. However, First Capital Holdings managed to close 5.9% higher today driven by favorable earnings report. Today’s earnings batch was mostly negative with the exception of Citrus Leisure group companies, First Capital Holdings and Dunamis Capital.

Foreign investors were net buyers with net foreign inflow of LKR 12mn. The foreign activity accounted for 32% of the market turnover. Top net inflows were seen in Ceylon Tobacco (LKR 5mn), Commercial Bank (LKR 2mn) and Ceylon Cold Stores (LKR 2mn) while top net outflow was seen in John Keells Holdings (LKR 1mn).
Source: LSL