COLOMBO: Sri Lankan shares extended falls to an eighth session on Wednesday, posting their lowest close since April 7, 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 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 0.21 percent at 6,242.68. It has fallen 2.77 percent over the past eight sessions after the budget was presented on Nov. 10.
The index was in oversold territory, with the 14-day relative strength index at 15.978 versus Tuesday’s 16.929, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.
“Market is down in low trade as investors are on wait-and-see mode,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.
Foreign investors sold a net 100.7 million rupees ($678,571.43) worth of shares on Wednesday, extending the year-to-date net foreign outflow to 1.27 billion rupees.
Analysts said the increase in various taxes and fees would reduce disposable income and challenge consumption-led growth. Turnover was 284.9 million rupees, well below this year’s daily average of 698.6 million rupees.
Shares of Lion Brewery Plc fell 6.81 percent, while Hemas Holdings Plc declined 5.00 percent and Ceylon Tobacco Company Plc fell 1.24.
