(Reuters) - Sri Lankan shares dropped on Thursday, weighed down by foreign sell-offs and profit-taking mainly in construction shares, while the rupee ended weaker.

** The Sri Lankan rupee fell 0.17% to 181.40/50 per dollar, compared to Wednesday’s close of 181.10/35, Refinitiv data showed. It is up 0.7% so far this year.

** The benchmark stock index closed down 0.73% at 6,160.88, its lowest since Nov. 27. The bourse gained 1.5% last week, and is up 1.79% for the year.

** The index touched its highest level since June 25, 2018 on Monday, lifted by hopes of booming economic activities after the new government last week cut some key taxes.

** Analysts said the recent tax reduction has already been factored in and the market was waiting to see the impacts of the new policy. They said investors sold construction shares and these were rising on hopes the new government will encourage a construction boom.

** The government on Nov. 27 reduced value-added tax to 8% from 15% starting Dec. 1, and abolished some other taxes as well in its attempt to boost economic growth that has fallen to a near two-decade low.

** Emerging Asia Economics, in a note on Monday, said the tax cut decision would provide a significant boost to the economy, but put increased strain on the country’s fragile public finances, with a possible loss of $2 billion in revenue.

** Foreign investors were sellers on Thursday in the equity market for the 26th session out of last 29.

** They sold a net 27.8 million Sri Lankan rupees ($154,444)worth of shares on Thursday, extending the year-to-date foreign outflow to 10.8 billion rupees, according to index data.

** Equity market turnover was 1.2 billion Sri Lankan rupees, more than this year’s daily average of about 728.5 million. Last year’s daily average was 834 million rupees.

** Foreign investors were net buyers of government securities on a net basis for the sixth straight week, purchasing a net 4.3 billion Sri Lankan rupees worth of government securities in the week ended Nov. 27.

** Total foreign outflows from government securities through Nov. 27 stood at 43.7 billion rupees, according to central bank data.