Sri Lankan shares, rupee gain after tax cuts; policy rates awaited

Reuters – Sri Lankan shares and rupee ended higher on Thursday, a day after the government said it has decided to reduce value-added tax to 8% from 15% with effect from Dec. 1, along with plans to abolish some other taxes as well. ** The gains also come a day ahead of the central bank’s key monetary policy rate decision, which is likely to be left steady at a policy review on Friday, a Reuters poll indicated. ** The benchmark stock index jumped 1.34% to 6,201.12, its highest since June 25, 2018. The bourse gained 1.6% last week, and is up 1.10% for the year. ** Analysts said positive sentiment surrounding tax cuts by the country’s newly elected president helped. ** “The market expects a booming consumer demand due to the tax cut,” said Dimantha Mathew, head of research at brokerage First Capital Holdings. ** The rupee ended 0.11% firmer at 180.60/80 per dollar, compared to Wednesday’s close of 181.80/181.10, Refinitiv data showed. It is up 0.5% so far this year. ** Foreign investors were net sellers for 23 sessions out of 25. ** They sold a net 821.2 million rupees ($4.56 million) worth of shares on Thursday, extending the net selling so far this year to 10.3 billion rupees worth of equities, according to index data. ** Equity market turnover was 2.78 billion rupees, more than this year’s daily average of about 721 million rupees. Last year’s daily average was 834 million rupees. ** Meanwhile, foreign investors were net buyers of government securities on a net basis for the fifth straight week, purchasing a net 0.21 million rupees worth of government securities in the week ended Nov. 20. ** Total foreign outflows from government securities through Nov. 20 stood at 48 billion rupees, according to central bank data.

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