Nepse gains steam, up 49.22 points

- Rajesh Khanal, Kathmandu

Dec 30, 2018-

Nepal Stock Exchange (Nepse) index last week gained 49.22 points to close at 1,215.16 points as the Nepal Rastra Bank stepped in to address the problems in the country’s only secondary market by adopting a lenient policy with regards to providing loan against shares.

The central bank revised its unified directive to banking and financial institutions on Wednesday by reducing the risk weight in loan against shares to 100 percent from 150 percent, asking banks to provide margin lending of up to 65 percent from 50 percent and allowing banks to issue loan on shares at a maximum of 40 percent of their core capital which had been capped at 25 percent previously.

Along with a rise in Nepse, the average daily turnover also rose to Rs785.73 million from Rs443.06 million in the previous week. 

The secondary market that opened at 1,165.94 points on Sunday added 32.24 points to close at 1,198.18 points. However, on Monday and Tuesday, the market slid by 6.44 points and 5.73 points respectively. On Wednesday, the central bank stepped in and announced new measures to address problems in the secondary market. This cheered investors. Consequently, the index surged by 30.23 points.

The buoyant mood among investors hit fever pitch on Thursday, with transaction volume hitting Rs1.12 billion—the largest single-day transaction in the last three months. However, it was not enough to prevent the index from dropping 1.08 points.

As a result, the market closed 4.22 percent higher in overall trading days during the review period.

Stockbrokers attributed the positive U-turn in the market to the government’s initiative to address the underlying problems of the secondary market. 

“The investors were encouraged to invest in the secondary market with the government’s fresh move,” said a stockbroker under condition of anonymity.

The sensitive index that measures the performance of Group ‘A’ companies also inclined by 10.6 points to close at 258.66 points with a rise in the sub-indices of almost all of the groups in the trading list.

Along with the soaring market index, the average value of the listed shares also increased by Rs63.86 billion, as the market capitalisation stood at Rs1,457.45 billion, up from Rs1,393.59 billion in the previous week.

Except for the sub-index of trading, the rest posted green in their indices. Life insurance gained the largest of 900.17 points and closed at 6,307.64 points. Non-life insurance also gained 469.58 points to close at 5,796.15 points. 

The rest of the gainers posted a double digit growth in their indices. Microfinance gained 91.49 points followed by ‘others’ (46.99 points), hydropower (26.25 points) and manufacturing with an addition of 25.99 points. 

Likewise, commercial banks gained 21.92 points, development banks gained 16.82 points, finance companies gained 13.01 points and hotels gained 11.75 points. 

With a decline of 0.67 points, the sub-index of trading was the only loser during the review period.   

Of the individual companies, NMB Bank posted the biggest volume of share transaction at Rs229.92 million. It was followed by Nepal Life Insurance, Nepal Bank Limited, Nepal Investment Bank Limited and Global IME Bank. 

Last week, stocks worth Rs3.92 billion were transacted, which was 77.37 percent more compared to the previous week. The total number of traded shares also increased to 11,137,088 units from 6,655,512 units.

Published: 30-12-2018 07:29

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