Shares fall for 4th straight session; VAT proposal weighs

REUTERS: Sri Lankan shares fell for a fourth straight session yesterday, led by large caps, as selling pressure on stocks expected to take a hit from a proposed tax increase weighed on sentiment.

The benchmark Colombo stock index ended 0.32 percent weaker at 6,429.94, its lowest close since Aug. 1. It fell 0.34 percent last week, its fourth straight weekly loss.
A government proposal last week to raise the Value Added Tax (VAT) to 15 percent from 11 percent hit sentiment yesterday.

“The downtrend continued today also. The selling pressure is there mainly on the shares that could be affected by the tax,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

“Going forward, we don’t think this trend of correction will last long.”
Turnover stood at Rs.458.6 million ($3.15 million), less than this year’s daily average of Rs.740.4 million.
Foreign investors net bought Rs.145.4 million worth of equities yesterday. They have net sold Rs.2.1 billion worth of shares so far this year.

Distilleries Company of Sri Lanka fell 1.67 percent, with foreign investors buying a net 132,693 shares in the company yesterday.

The company said last month that it would rejig a share ownership with Melstacorp, its 100 percent-owned subsidiary. The reorganisation will occur after Sept. 30.
Shares of Ceylon Tobacco Company Plc fell 1.07 percent, while the biggest listed lender Commercial Bank of Ceylon Plc declined 1.13 percent.           (CW)