Sri Lankan shares jumped more than 1 percent on Thursday as investors sought bargains in bluechips and on buying by foreign investors. The Colombo stock index ended up 1.09 percent at 6,309.04, its highest close since November 18. The index hit a near-eight-month low on Tuesday on concerns that the proposed hike in various taxes and fees would reduce disposable income and challenge consumption-led growth.
Foreign investors bought a net 45.4 million rupees ($306,860.43) worth of shares on Thursday, but have been net sellers of 1.59 billion rupees worth of shares so far this year. Turnover stood at 1.18 billion rupees, more than this year's daily average of 696.8 million rupees. "Market is very bullish with continued foreign buying," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.
"Early morning buying in John Keells boosted confidence levels and brought the buying in to the market. Excess liquidity in the banking system is also helping the market." The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees year-on-year and meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.
The market shrugged off the central bank's monetary policy decision on Tuesday to keep rates unchanged. Brokers said investors are concerned about sustainability of rates. Shares of biggest listed lender Commercial Bank of Ceylon Plc jumped 1.43 percent while Colombo Cold stores Plc rose 3.59 percent and conglomerate John Keells Holdings Plc rose 1.15 percent.
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