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.
-Agencies
