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Sri Lankan shares fall to 8-month closing low

COLOMBO, Dec 2 (Reuters) – Sri Lankan shares fell for a sixth straight session on Wednesday to their eight-month closing low, led by banking and diversified stocks on worries earnings of financial firms would be hit after the new budget proposals announced were implemented.

Sentiment was also hurt after Prime Minister Ranil Wickremesinghe warned of lower economic growth in 2016 due to the global slowdown.

"We have to expect declining commodity prices that have an impact on the Sri Lankan economy and there’ll be reduced flows to emerging capital markets," Wickremesinghe said at a ceremony marking 30 years of the formal establishment of the Colombo Stock Exchange.

Rating agency Fitch last week said that Sri Lanka’s 2016 budget provides no clear plan for fiscal consolidation over the medium term and the absence of such a framework will put more pressure on the fiscal deficit.

The government on Nov. 20 announced a raft of steps, including the removal of a 0.3 percent share transaction levy, to stimulate trading in the share market and increase liquidity.

The main stock index ended 0.47 percent, or 32.40 points, weaker at 6,862.79, its lowest close since March 31.

The index fell to its oversold territory with the 14-day Relative Strength Index at 27.625 versus Tuesday’s 30.676, Reuters data showed. A level of 30 or below indicates the market is oversold.

"Market is down on banks and banks are down on taxes," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Turnover rose to the highest level since Nov. 6 at 1.65 billion rupees ($11.53 million), led by block deals in conglomerate John Keells Holdings Plc.

This was against Tuesday’s turnover of 509.2 million rupees and this year’s daily average of 1.1 billion rupees.

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Foreign investors, who have been net sellers of 3.55 billion rupees worth of shares so far this year, were net buyers for a third straight session with purchases of 21.3 million rupees on Wednesday.

Shares of Ceylinco Insurance Plc fell 6.10 percent, while John Keells Holdings dropped 0.94 percent.

 

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