Increasing state tax revenue seen as having a bearing on stock investments

By Hiran H. Senewiratne

Most CSE investors are adopting a wait- and- see approach on how their investments would be viable in view of the local tax hike, which has increased tax revenue by 116 percent in the first quarter of the year, market analysts said.

During this year’s first quarter the Department of Inland Revenue had collected Rs 316.6 billion in tax revenue as against Rs 146.6 million last year. Therefore, investors are observing how, with the new tax hike, companies have performed during the first four month of the year, market analysts explained.

The market started on a negative note yesterday but during the latter part of the session indicated a slight recovery, on the basis of which they anticipate the market would turn positive from today, analysts said.

Amid those developments both indices moved downwards. The All- Share Price Index went down by 37.39 points and S and P SL20 declined by 9.81 points. Turnover stood at Rs 1.1 billion with four crossings.

Those crossings were reported in Windforce, which crossed 8.1 million shares to the tune of Rs 142.6 million, its shares traded at Rs 17.50, TJLanka 881,500 shares crossed for Rs 29.8 million and its shares traded at Rs 33.90, Melstacorp 500,000 shares crossed for Rs 27.2 million, its shares fetching Rs 54.50 and RIL five million shares crossed to the tune of Rs 27 million, its shares traded at Rs 5.40.

In the retail market top seven companies that mainly contributed to the turnover were, Aitken Spence Rs 170 million (2.2 million shares traded), Dialog Axiata Rs 93.5 million (8.5 million shares traded), Capital Alliance Rs 56.6 million (1.9 million shares traded), Expolanka Holdings Rs 54.3 million (341,000 shares traded), CTC Rs 146.9 million (65000 shares traded), Browns Investments Rs 40.7 million (seven million shares traded) and Ceylon Theatres Rs 34.1 million (187,000 shares traded). During the day 61.3 million share volumes changed hands in 12184 transactions.

Foreign investment in Sri Lanka government securities has been rising substantially during the last week from a stagnant US $ 231 million to an improved $ 365 million as at end of April 21.

Despite the domestic market being rattled by DDR concerns and a slight upward revision of the secondary market rates the above inflow is substantial. Still, it is not clear whether these inflows are focused on a short-term gain on T-Bills or long-term investment on T-Bonds, Central Banks sources said.

Yesterday the Central Bank’s US dollar buying rate was Rs 313.26 and the selling rate Rs. 328.54.