Sri Lanka shares slipped on Tuesday led by stocks that may likely to be impacted by the 2023 budget presented this week, but turnover improved as markets and investors are gradually absorbing the impacts of the policies.
President Ranil Wickremesinghe in his capacity as the finance minister presented 2023 budget in the parliament which aimed at raising taxes by 63 percent year-on-year, while showing some signals on fiscal consolidation.
The main All Share Price Index (ASPI) closed 0.86 percent or 71.77 points lower at 8,291.52.
“The overall budget has nothing to do with the market. But some of the policies will have an impacts on some industries and companies.” a stockbroker said.
“For instance, the budget has mentioned about fuel surcharge tax and that resulted in the fall of Lanka IOC shares. The overall budget is not positive for retail sector and that dragged Richard Pieris (and Company Plc).”
Richard Pieris fell 12.4 percent to 22 rupees and Lanka IOC eased 4.6 percent to 175 rupees.
Market heavyweight Expolanka closed 3.9 percent weaker at 1422.25 rupees.
The budget saw policies that will increase the cost of doing businesses across the board, but relieving the government from depending on excess money printing, analysts say.
The market witnessed a turnover of 1.6 billion rupees, just above half of \this year’s daily average turnover of 3.1 billion rupees.
The market saw a foreign outflow of 154 million rupees. But the market has seen a total net foreign inflow of 17.7 billion rupees so far for this year.
Analysts expect a bearish sentiment on banking sector to continue until the government decide on local debt restructuring.
The market has been on a falling trend as investors awaited for cues on policies from the 2023 budget.
Investors are also concerned over the impact of local debt restructuring on risky assets, analysts have said, as the market is waiting for a debt restructuring decision between the government and its creditors ahead of an IMF loan approval.
The more liquid index S&P SL20 closed 0.83 percent or 21.33 points lower at 2,545.28.
The ASPI has fallen 3.6 percent so far in November after losing 13.4 percent in October. It has lost 32.2 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
The listed companies have shown reasonable profits in their third quarter of the year, however, analysts say the disposable income of the general public due to proposed tax hikes is the main reason for the negative expectations over the December earnings.