Sri Lankan shares fall to over 7-1/2 mth closing low on budget worries

COLOMBO, Nov 30 (Reuters) – Sri Lankan shares fell to a more than seven-and-a-half-month closing low on Monday, led by blue chips such as John Keells Holdings Plc and Commercial Bank of Ceylon Plc on worries earnings of financial firms would fall after the new budget proposals announced were implemented.

The main stock index ended 0.75 percent, or 52.26 points, weaker at 6,909.15, its lowest close since April 10.

"Nothing much is happening with very low retail and high net worth investor participation," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"With the month-end settlements, big caps came down. With very low foreign participation, markets will continue to come down for the next few weeks until we see steady foreign inflows."

Sri Lanka’s consumer prices in November rose to 10-month high of 3.1 percent from a year earlier, the Department of Census and Statistics said on Monday.

Rating agency Fitch said on Tuesday 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.

"Fitch believes there are risks to government being able to meet its fiscal deficit target, especially considering the trend in revenues in recent years," the rating agency said.

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.

Shares of conglomerate John Keells Holdings fell 2.55 percent, while the country’s biggest listed lender, Commercial Bank of Ceylon, dropped 3.24 percent and Nestle Lanka Plc declined 1.63 percent.

Turnover was 754.4 million rupees ($5.27 million), lower than this year’s daily average of 1.1 billion rupees.

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Foreign investors, who have been net sellers of 3.77 billion rupees worth of shares so far this year, bought a net 34.27 million rupees worth of equities on Monday.

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