Reuters – Sri Lankan shares fell on Monday to a near eight-month low, ahead of central bank policy rate announcement as investors kept to the sidelines amid concerns over budget tax proposals including revisions in corporate and withholding taxes.
Analysts said investors were awaiting the central bank’s decision on interest rates on Tuesday. They expect the apex bank to leave rates unchanged for a fourth straight month.
The Colombo stock index ended 0.21 percent down at 6,238.87, its lowest close since April 7. The bourse lost 1.17 percent last week, marking its third straight weekly fall.
“Market is very sluggish as there is no positive direction for it to move up. Everybody is waiting, looking for a direction (in interest rates),” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.
Analysts said the increase in various taxes and fees would reduce disposable income and challenge consumption-led growth.
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.
Turnover was 386.3 million rupees ($2.60 million), well below this year’s daily average of 693.7 million rupees.
Foreign investors sold a net 137.2 million rupees worth of shares on Monday, extending the year-to-date net foreign selling to 1.39 billion rupees.
Shares of biggest listed lender Commercial Bank of Ceylon Plc fell 1 percent and Ceylon Cold Store Plc lost 7.35 percent, while National Development Bank Plc closed 2.76 percent lower.