During the review period of November 24 to December 26, 2019, the Nepal Stock Exchange (NEPSE) index went up by 46.81 points (+4.18%) to close at 1167.41 points. The market gained some momentum during the review period as investors flocked into underpriced shares of commercial banks and Insurance companies. The total market turnover during the period rose by 118.39% and stood at NPR 10.45 billion. In terms of yearly review of 2019, the market started the year at 1185.91 points with the highest point of 1,321 points in May and a lowest point of 1,109 points in November.
During the review period, contrary to the previous period, all of the sub-indices landed in the green zone. The Life Insurance sub-index (+14.25%) was the biggest gainer as share value of Nepal Life Insurance (+NPR 195) and Life Insurance Company (+NPR 130) went up. Non-Life Insurance sub-index (+11.55%) was second in line with the increase in the share value of Rastriya Beema Company (+NPR 604) and Shikhar Insurnace (+NPR 121).
Similarly, Microfinance sub-index (+10.22%) was also in the gaining side with the rise in the share value of Deprosc Microfinance (+NPR 140) and Nepal Seva Microfinance (+NPR 120). Others sub-index (+7.78%) also faced an increase in the share value of Citizen Investment Trust (+NPR 261).
Following this, Development Bank sub-index (+3.43%) saw a jump in the share value of Lumbini Bikas Bank (+NPR 25) and Dev Bikas Bank (+NPR 15). Likewise, Finance sub-index (+3.40%) also went up with the rise in the share value of Manjushree Finance (+NPR 30). Manufacturing & Processing sub-index (3.03%) also saw a surge with the increase in the share value of Shivam Cements (+NPR 56). Hotels sub-index (+2.64%) followed suit with the jump in the share value of Oriental Hotels (+NPR 36). Hydropower sub-index (+2.46%) also saw a significant rise in the share value of Chhyangdi Hydropower (+NPR 14). Besides, Commercial Bank sub-index (+1.21%) also witnessed a gain in the share value of Himalayan Bank (+NPR 30), Sanima Bank (+NPR 10) and Sunrise Bank (+NPR 7).
News and Highlights
The two “A” class commercial banks, Global IME Bank and Janata Bank, officially merged to become Global IME Bank. This merger is in line with this fiscal year’s monetary policy which encouraged merger and acquisition of banks and financial institutions (BFIs) to strengthen their financial stability. Following the merger, Global IME Bank has become the biggest commercial bank in terms of capital, business and branch network in the country. Global IME Bank now has a paid-up capital of NPR 19 billion, deposits of NPR 213 billion and loans of NPR 194 billion. It has 300 branch offices with 259 ATMs, 33 extension counters and 243 branchless banking points all over the country. Moreover, the merger between the banks also means that the number of commercial banks has come down to reach at 27 from 28.
In the public issue front, SEBON has approved Initial Public Offering (IPO) of Reliance Life Insurance Limited (RLIL) of 6,300,000 equity shares worth NPR 630 million. Sanima Capital has been appointed as its issue manager. ICRA Nepal has assigned [ICRANP] IPO Grade 4 rating to the issue, indicating below average fundamentals. Similarly, Sadhana Microfinance is going to issue initial public offering of 6.30 lakh units worth NPR 6.30 million. Global IME Capital has been appointed as the issue manager.
Likewise, NEPSE has listed the debentures of Himalayan Bank, named ‘Himalayan Bank Debenture 2083’ at 10% with 25 lakh units at par value of NPR 1000 per unit. It has also listed two other debentures, namely, “10.25% NIC ASIA Debenture 2083/84” with 1.9 lakh units and “10.25% Machhapuchhre Bank (MBL) Debenture 2085” with 3 lakh units on the stock exchange.
The investors’ confidence seems to be gradually building as we approach toward 2020 indicated by the daily market turnover. The market turnover increased by an impressive 118.34% during the review period. Due to lower investors’ confidence, the NEPSE Index has been hovering between 1,180 to 1,110 points since early September of 2019. Going forward, the market may witness some selling pressure as investors tend to sell shares after realizing dividends from the last fiscal year. Nonetheless, if the market continues to maintain this mark with noteworthy volume and investor optimism, the index can be expected to gain some momentum. Also, as the second quarter ending of the fiscal year approaches, the performance of the listed companies is likely to affect the course of the market in the coming days.
This is an analysis from beed Management Pvt. Ltd. No expressed or implied warrant is made for usefulness or completeness of this information and no liability will be accepted for consequences of actions taken on the basis of this analysis.