Sri Lankan shares up for third straight session on blue chips

Sept 23, 2016 (Reuters) – Sri Lankan stocks edged up for a third straight session on Friday posting a more than one week closing high, led by gains in large cap shares amid investor appetite for stocks that took a hit earlier in the week due to a proposed tax increase.

The International Monetary Fund (IMF) said on Friday that Sri Lanka’s government, which has failed to raise taxes as promised when it received a $1.5 billion loan from the lender in June, needs to implement a tax reform package without delay.

The IMF also said that central Bank should be ready to tighten monetary policy further if inflation or credit growth continue to rise.

The benchmark index of the Colombo Stock Exchange ended 0.22 percent or 14.27 points higher at 6,479.21, its highest close since Sept. 14.

The index gained 0.10 percent this week, after four straight weeks of losses.

“Interest in blue chips is continuing,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd. “Investors are no longer on wait-and-see and are starting to buy in to the stocks.”

Foreign investors bought a net 112.6 million rupees worth of shares on Friday. But they have been net sellers of 2.83 billion rupees worth of equities so far this year.

Turnover stood at 886.3 million rupees, more than this year’s daily average of 753 million rupees.

Shares in Distillers Company of Sri Lanka Plc rose 4.69 percent while Asian Hotel Properties Plc jumped 7.14 percent, driving the overall index higher.

The bourse had hit a more than seven-week low on Tuesday as selling pressure on stocks that were expected to take a hit from a proposed tax increase weighed on sentiment.