Sri Lankan shares hit fresh 3-mth closing low ahead of budget

Nov 01, 2016 (Reuters) – Sri Lankan shares extended losses for a third straight session to close Tuesday at a fresh three-month low as investors shrugged off the central bank’s decision to keep rates unchanged.

The central bank held the benchmark interest rates on hold late on Monday, as expected, saying its monetary policy stance remained appropriate as credit growth slowed.

The benchmark index of the Colombo Stock Exchange ended down 0.14 percent, or 9.06 points, at 6,400.17, its lowest close since July 29. The index lost 1.92 percent in October.

Sentiment was also muted as investors remained cautious ahead of the national budget scheduled on Nov. 10.

“Market wasn’t much active as the investors are waiting to see if there would be capital gains tax and how the budget is going to be,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

Prime Minister Ranil Wickremesinghe said last week the government will introduce a lower tax regime in its upcoming budget to boost faltering investment.

Traders said the prime minister’s statement failed to lift the sentiment.

Tuesday’s turnover was 321.3 million rupees ($2.17 million), less than half this year’s daily average of 726.2 million.

Foreign investors were net sellers of 16.8 million rupees worth of equities on Tuesday, extending the net foreign outflow so far this year to 1.75 billion rupees worth of shares. They bought a net 1.21 billion rupees worth of shares in October.

Sri Lanka’s quarterly earnings season started two weeks ago, but most locally listed firms report in late October or early November.

Shares in Nestle Lanka Plc fell 4.29 percent while Ceylon Tobacco Company Plc lost 0.59 percent.

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