During the review period of September 22 to October 24, 2019, the Nepal Stock Exchange (NEPSE) index went down by 5.96 points (-0.52%) to close at 1149.34 points. Despite the dividend announcement from a number of key blue chip companies, the market experienced a downward spiral. This bearish trend during the review period can also attributed to the festive-sentiment to some extent as the investors tend to sell shares to manage incremental expenses during the festival. However, the market’s behaviour also showed a positive increment after a call from the Finance Minister, Yubaraj Khatiwada, to invest in stock exchange from fundraisers such as Employee Provident Fund (EPF) and Citizen Investment Trust (CIT). Nonetheless, the total market turnover during the period fell by 43.94% and stood at Rs 3.92 billion indicating weak investor confidence.
During the review period, contrary to the previous period, two of the sub-indices landed in the green zone and the rest of the eight sub-indices landed in the red zone. The Others sub-index (+1.67%) was the biggest gainer as share value of Nepal Telecom (+Rs 20) went up. Finance sub-index (+0.58%) was second in line with the increase in the share value of City Express Finance (+Rs 8) and Best Finance (+Rs 6).
On the losing side, Hotels sub-index (-5.03%) faced the biggest drop as the share value of Oriental Hotels (-Rs 67) and Soaltee Hotel (-Rs 11) went down. Following this, Non-life insurance sub-index (-4.07%) saw a decrease in the share value of Rastriya Beema Company (-Rs 580) and Lumbini General (-Rs 41). Similarly, Manufacturing & Processing sub-index (-3.59%) also fell with the decrease in share value of Shivam Cement (-Rs 79) and Himalayan Distillery (-Rs 22). Microfinance sub-index (-0.89%) also went down with fall in the share value of NMB Microfinance (-Rs 510) and Samata Microfinance (-Rs 64). Likewise, Life insurance sub-index (-0.50%) followed suit with slump in the share value of National Life Insurance (-Rs 35). Hydropower sub-index (-0.46%) also shed value with the significant decrease in the share value of Chilime Hydropower (-NPR 16) and Ridi Hydropower Development (-Rs 10). Besides, Development bank sub-index (-0.26%) also witnessed a plunge in the share value of Kanchan Development Bank (-Rs 16).
Commercial bank sub-index (-0.17%) also went down marginally as share value of Sanima Bank (-Rs 37) and Siddhartha Bank (-Rs 33) decreased.
News and Highlights
The Nepal Stock Exchange (NEPSE) directed broker companies to operationalise margin trading immediately after consent from Securities Exchange Board of Nepal (SEBON). Through margin trading, a platform will be created that will enable investors to borrow money from their brokers to buy shares. Up until now, 21 out of 50 broker companies have acquired the approval from NEPSE. Additionally, considering the ongoing disappointment among investors regarding commission rates, SEBON has formed a four-member panel to study the rationale of revising commission rates of broker companies. Also, SEBON has formed a committee to draft an act to regulate the funds of the secondary market.
On the public issue front, SEBON has approved Initial Public Offering (IPO) of Shiva Shree Hydropower to the general public worth Rs 335.11 million. SEBON has also added the IPOs of Terhathum Power worth Rs 120 million and CEDB Hydropower worth Rs 251.8 million to its pipeline. For Tehrathum Power, NIBL Ace Capital has been appointed as the issue manager and ICRA Nepal has assigned Grade 4+ rating indicating below-average fundamentals. Likewise, for the latter, Sunrise Capital has been appointed as the issue manager. For the primary issue of Nepal Re-insurance shares, RBB Merchant Banking has been appointed as the issue manager and IPO Grade 2 has been assigned by ICRA Nepal indicating above average fundamentals.
The poor volume in the market reflects the spillover impact of tightening liquidity in the banking sector, also the ongoing festive season has not helped as investors refrained from making new investments. Despite measures such as introduction of margin lending and attractive dividend declarations from listed companies, there has been no improvement in investor confidence level. The market is likely to continue with the current trend unless there is significant improvement in the market volume.
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.