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Sri Lankan shares fall for 4th straight session

COLOMBO, Sept 20 (Reuters) – Sri Lankan shares fell for a fourth straight session on Tuesday, 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 August 1. It fell 0.34 percent last week, its fourth straight weekly loss.

A government proposal last week to raise value-added tax (VAT) to 15 percent from 11 percent hit sentiment on Tuesday.

"The downtrend continued today also. 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 Rs458.6 million ($3.15 million), less than this year’s daily average of Rs740.4 million.

Foreign investors net bought Rs145.4 million worth of equities on Tuesday. They have net sold Rs2.1 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 on Tuesday.

The company said last month that it would reorganise a share ownership with Melstacorp, its 100 percent-owned subsidiary.

The reorganisation will occur after September 30.

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Shares of Ceylon Tobacco Company Plc fell 1.07 percent, while the biggest listed lender Commercial Bank of Ceylon Plc declined 1.13 percent.

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