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Thu, April 25, 2024

September 25 to October 31: Beed’s take on the market

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During the review period from September 25 to October 31, 2023, the Nepal Stock Exchange (NEPSE) index declined by 147.81 points (-7.35%) to close at 1,864.40 points. The secondary market reached its lowest to 1,851.43 points on October 16. The festive season created high selling pressure in the market. The total market volume during the review period increased by 34.49% to reach Rs 25.76 billion.

During the review period, all 10 of the sub-indices fell in the red zone, indicating strong selling pressure across all sectors. 

Hotels and Tourism sub-index (-14.39%) was the biggest loser as the share value of Chandragiri Hills (-Rs 186), City Hotel (-Rs 129), and Kalinchowk Darshan (-Rs 127.1) decreased substantially. Life Insurance sub-index (-10.47%) was second in line as it witnessed a fall in the share prices of Life Insurance Corporation Nepal (-Rs 114.9), Suryajyoti Life Insurance (-Rs 77) and Sanima Reliance Life Insurance (-Rs 73). 

Similarly, Non-Life Insurance sub-index (-9.27%) followed suit with a decrease in the share prices of Rastriya Beema Company (-Rs 1,229), Sanima GIC Insurance (-Rs 141.5), and United Ajod Insurance (-Rs 90.9). Likewise, Hydropower sub-index (-8.59%) also fell as share value of Shuvam Power (-Rs 250), Three Star Hydropower (-Rs 170), and Mountain Energy Nepal (-Rs 93.5) went down.

Meanwhile, the Finance sub-index (-7.45%) went down as share prices of Goodwill Finance (-Rs 56), Gurkhas Finance (-Rs 48) and ICFC Finance (-Rs 37) declined. Along the same lines, Manufacturing and Processing sub-index (-6.84%) witnessed a decline in the share prices of Bottlers Nepal (Terai) (-Rs 131), Himalayan Distillery (-Rs 110), and Ghorahi Cement (-Rs 89). 

Likewise, Development Bank sub- index (-6.59%) saw a decrease in the share values of Green Development (-Rs 38.8), Lumbini Bikas (-Rs 34.6), and Shangrila Development (-Rs 33.7). Microfinance sub-index (-5.81%) was also on the losing end with a decrease in share prices of BPW Microfinance (-Rs 208), Nesdo Sambridha Microfinance (-Rs 161), and Aatmanirbhar Microfinance (-Rs 155).

Further, Commercial Bank sub-index (-5.77%) also followed suit with a decline in the share value of NIC Asia (-Rs 267), Everest Bank (-Rs 115) and Machhapuchchhre Bank (-Rs 61.1). Finally, Others sub-index (-5.48%) lost the least with a decline in the share value of Nepal Reinsurance Company (-Rs 70.6), Sonapur Minerals and Oil (-Rs 33) and Nepal Republic Media (-Rs 23.1).

News and Highlights

The Securities Board of Nepal (SEBON) has amended the Securities Dealers (Securities Brokers and Securities Dealers) Regulations, 2064 by reducing brokerage fees. It is awaiting final approval from the Ministry of Finance. On a positive note, Nepal Rastra Bank (NRB) has also increased the margin lending ceiling, removing the previous upper limit of Rs 120 million. As per the new decision, the margin lending ceiling is now fixed at Rs 150 million for individuals and Rs 200 million for institutional investors. 

On the public issues front, SEBON has approved the initial public offering (IPO) for one company under Manufacturing and Processing, and three under the Others sector. Under Manufacturing and Processing, SEBON approved the IPO of Sarbottam Cement worth Rs 4.29 billion. Global IME has been appointed as its issue manager. Under Others sector, the IPOs of Muktinath Krishi Company, Nepal Warehousing Company, and Himalayan Re-insurance worth Rs 700 million, Rs 687.5 million and Rs 10 billion, respectively have been approved. Their respective issue managers are NIMB Ace Capital, Himalayan Capital and NMB Capital. 

Likewise, SEBON has also kept the IPO of Jagdamba Steels worth Rs 6.02 billion with Siddhartha Capital as its issue manager under preliminary review. Similarly, the IPOs of Apex Hospitality and SY Panel Nepal worth Rs 240 million and Rs 523.25 million with Himalayan Capital and Prabhu Capital as their respective issue managers have also been placed under preliminary review. Moreover, SEBON has also done the same with six hydropower companies: Richet Jalbidhyut Company (Rs 117.65 million), Beni Hydropower Project (Rs 208 million), Yambaling Hydropower (Rs 280 million), Mabilung Energy (Rs 189.05 million), Solu Hydropower (Rs 2 billion) and Taksar Pikhuwa Khola Hydropower (Rs 423.07 million). Their respective issue managers are NIMB Ace Capital, NMB Capital, Muktinath Capital, Laxmi Capital Market, Nabil Investment Banking, and Prabhu Capital.

Outlook

All the sub-sectors lost ground during the review period, in contrast to the preceding one. Following the central bank’s decision to raise the margin lending threshold, a favourable market momentum was expected. Despite this, the market was unable to sustain the upward trend from the preceding month as selling pressure increased due to the festive season. As a large number initial public offerings are anticipated to hit the primary market soon, the market is expected to maintain its current momentum. The decision to lower the current stock brokerage fees is also something that investors are anxiously anticipating being approved. 

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.

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