Sri Lankan stocks fell to a near one-week closing low on Wednesday as investors booked profits in diversified and telecom shares while concerns over a proposed tax bill weighed on overall investor sentiment. The Colombo stock index ended 0.36 percent down at 6,709.76, its lowest close since June 29. The bourse hit 18-month high and climbed 0.47 percent last week.
However, foreign investors net bought 56.1 million rupees ($365,353.31) worth of shares on Wednesday, extending their year-to-date net inflows to 22.5 billion rupees worth of equities. Gross foreign buying accounted for around 77 percent of the day's turnover of 854.7 million rupees, which was less than this year's daily average of 922.4 million rupees.
"Foreigners are running the show and taking bulk of the turnover. The local participation is low due to uncertainty over taxes," said Dimantha Mathew, head of research, First Capital Holdings PLC.
Brokers said local investors have been waiting for some clarity on the proposed inland revenue legislation, which some companies expect will result in higher cost of production. The IMF, which has long urged Sri Lanka to boost tax revenue through modernisation and simplification of its fiscal system, has urged the government to submit to parliament a new Inland Revenue Act. Shares of Carson Cumberbatch Plc lost 7.7 percent while Dialog Axiata Plc fell 1.7 percent, Conglomerate John Keells Holdings Plc fell 0.5 percent and Sri Lanka Telecom Plc ended 1.9 percent weaker.
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