During the review period of November 23 to December 20 2018, the Nepal Stock Exchange (NEPSE) index plunged by 15.27 points (-1.29%) and closed at 1,165.97 points. The market was mostly on a declining spree and dropped to 52 weeks low during the period mainly attributed to tight liquidity and fluctuating interest rate in the banking industry. However, despite fall in NEPSE index, the market witnessed a significant jump of 63% in trading volume. The total market turnover during the period stood at Rs 7.10 billion.
During the review period, all sub-indices landed in the red zone. The Hydropower sub-index (-11.28%) led the pack of losers with the decrease in share value of United Modi Hydropower (-Rs 11), Butwal Power (-Rs 11) and Panchakanya Mai Hydropower (-Rs 11). Similarly, Microfinance sub-index (-10.63%) was second in line with slump in share value of Nadep Microfinance (-Rs 600), Suryodaya Microfinance (-Rs 584) and National Microfinance (-Rs 460). Likewise, Hotels sub-index (-8.20%) followed suit with decrease in share value of Soaltee Hotel (-Rs 42) and Taragaon Regency (-Rs 3). Non-Life Insurance sub-index (-7.43%) went down with decrease in the share value of IME General Insurance (-Rs 250), United Insurance (-Rs 65) and Premier Insurance (-Rs 65). This was followed by Commercial Bank sub-index (-7.18%); top loser in this sub-index were Nabil Bank (-Rs 55) and Nepal SBI Bank (-Rs 38).
Likewise, Finance sub-index (-3.53%) shed value with decrease in the share value of Gurkhas Finance (-Rs 2). Similarly, Others sub-index (-3.25%) went down with the fall in share value of Citizen Investment Trust (-Rs 620). The Life Insurance sub-index (-3.10%) followed suit with decrease in share value of Gurans Life (-Rs 91) and National Life (-Rs 47). Development Bank sub-index (-1.98%) went down with decrease in share value of Muktinath Development Bank (-Rs 63) and Tinau Development Bank (-Rs 20).
News & Highlights
NEPSE has permitted individual stock investors to access its platform using their personal ID and password and conduct online trading without having to go through a broker. Although NEPSE had earlier launched a full-fledged online system providing access to the general public, individual investors were not able to use it due to technical problems.
The committee formed by the Ministry of Finance to study various aspects that have been challenging the financial stability of the country ranging from volatility in bank interest rates and fluctuations in the capital market has submitted its report with recommendations. Some of the recommendations relating to the capital market are: issuing broker licenses to eligible bank subsidiaries, increasing loan to value ratio from existing 50% to 65% on stock lending, public issues to be allowed only for organisations receiving up to grade 4 credit rating from rating agencies, forming and implementing regulations for discouraging insider trading, establishment of Settlement Guarantee Fund and Investors Protection Fund.
On the public issue front, Joshi Hydropower Development Company and Chautari Microfinance Limited issued Initial Public Offering (IPO) worth Rs 169.05 million and 54 million respectively. Meanwhile, Securities Board of Nepal SEBON has approved IPO worth Rs 966.16 million and Rs 155.58 million of Universal Power Company Ltd and Ghalemdi Hydro Ltd respectively. The issue of Universal Power Company has been assigned IPO Grade 4 indicating below average fundamentals and issue of Ghalemdi Hydro Limited has been assigned IPO Grade 5 indicating poor fundamentals by ICRA Nepal.
The impact of tight liquidity in the banking system is likely to continue in the coming days however some respite is expected with ease in interest rate volatility. Further, as listed companies have started to announce and distribute dividends from the fiscal year 2017/18, fresh batch of investors are likely to enter the market. However, for the market’s long-term sustainability and growth, proper implementation of action plans suggested in the report submitted by the special committee is going to be essential.
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.