CSE bounces back in the wake of Inland Revenue Act changes

By Hiran H.Senewiratne

The CSE edged down in mid-morning trade yesterday after opening over 1 per cent lower. Subsequently the market began to bounce back with the gazetting of the Inland Revenue Act, after three consecutive days of market decline, stock market analysts said.

Key changes in the Inland Revenue Act include reducing the tax-free threshold for personal income tax to Rs 1.2 million from Rs. 3.0 million and the raising the corporate tax to 30 percent from 24 percent. Capital gains tax for companies is expected to be raised from 10 percent to 30 percent for investment assets.

The stock market sharp plunge in indices reaffirmed worsening local investor sentiment though foreigners stepped up their buying especially in JKH, propelling the year-to-date inflow to over Rs. 16 billion, stock market analysts said.

Amid those developments buying interest was noted in Lanka IOC, Expolanka. ACL Cables and several other blue chip counters thus moving the bourse to red territory, stock market analysts said. The All- Share Price Index gained 108.66 points (1.24 per cent) to end the day at 8853.27 and S and P SL20 gained 34.82 points (1.31 per cent) to end the day at 2687.81. Turnover stood at Rs 2.3 billion without a crossing.

In the retail market top seven companies that mainly contributed to the turnover were, Lanka IOC Rs 550 million (2.6 million share traded), Expolanka Holdings Rs 379 million (2.5 million shares traded), ACL Cables Rs 194 million (2.2 million shares traded), Browns Investments Rs 69.7 million (11.5 million shares traded), JKH Rs 69.1 million (538,000 shares traded), JKH Rs 69.1 million (538,000 shares traded), CIC Holdings Rs 59.5 million (566,000 shares traded) and Royal Ceramic Rs 45.3 million (1.3 million shares traded). During the day 66.5 million share volumes changed hands in 28000 transactions.

It is said that high net worth and institutional investor participation was noted in JKH, ACL Cables and CIC Holdings. Mixed interest was observed in Expolanka Holdings, Lanka IOC and CIC Holdings, while retail interest was noted in Browns Investments, SMB Leasing (voting and nonvoting) and LOLC Finance.

The Capital Goods sector was the top contributor to the market turnover (due to JKH and ACL Cables), while the sector index lost 3.50 per cent. The share price of JKH decreased by 50 cents to close at Rs. 128.50.

Transportation sector was the second highest contributor to the market turnover (due to Expolanka Holdings) while the sector index decreased by 11.96 per cent. The share price of Expolanka Holdings lost Rs. 19.75 (11.99 per cent) to close at Rs. 145.

Lanka IOC and CIC Holdings nonvoting were also included among the top turnover contributors. The share price of Lanka IOC moved down by Rs. 15.25 (6.71 per cent) to close at Rs. 212.

Yesterday, the Central Bank- announced US dollar buying rate was Rs 359.66 and selling rate Rs 370.39.


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