Nepse down as festivals grip market

- Post Report, Kathmandu

Sep 18, 2016-

Nepal Stock Exchange (Nepse) index shed 7.88 points last week to close at 1815.17 points on Wednesday, the last trading day of the week, as investors became passive with the advent of the festive season.

The stock index opened at 1823.05 points on Sunday, the first trading day of the week, and lost 6.24 points on the same day to close at 1816.81 points. On Monday, the index recovered some of the losses to close 1818.69 points higher. On Wednesday the index lost 3.52 points to end the week 0.4 percent lower. The trading did not take place on Tuesday and Thursday due to public holiday. 

Along with the fall in the Nepse index, the sensitive index, which tracks the trading of Group ‘A’ companies, also slipped 1.69 points to 393.88 points.

Last week’s stock market fall reduced the value of all the shares listed on Nepse by Rs8.6 billion to Rs2,003.1 billion.

“The moderate loss last week indicates that the upcoming festive season has started gripping investors,” Stockbroker Anjan Poudel said. “We expect the index to remain around this level for a few weeks and the trading amount to fall, as the festivals near.”

Dashain, the biggest festival of Hindus in Nepal, is beginning in the next two weeks. It lasts for 15 days. But after this festival is over, Nepalis will start preparing for another festival, Tihar, which falls in the end of October.

“During the entire festive season of around a month, many stock investors go on a vacation or spend time with family. So the stock market loses vibrancy during that period,” said Poudel. “This is a regular phenomenon around this time of the year.”

A look at the trading data of last week show the banking sector was the biggest loser, with the banking sub-index shedding 15.77 points to close at 1731.42 points. The banking sector accounts for more than 50 percent of the stock market capitalisation, so the performance of this group tends to influence the movement of the Nepse index.

“Lately, investors are more interested in shares of banks that have already announced the dates of annual general meeting (AGM),” said Poudel.

This is an indication that investors are keen on buying shares of institutions that have ensured returns, as banks declare dividends, both cash and share, before holding their AGMs. The annual meetings have to be held within six months of the beginning of the new fiscal year, which falls in mid-January.

“Since banks still have time to hold AGMs, demand for stocks of banks that have not declared dividends is not high. And last week, bank stocks even witnessed selling pressure,” said Poudel. 

Other sectors that felt selling pressure last week were finance, hydro and others, which lost 2.94 points, 13.96 points and 11.85 points, respectively. The sectors that saw buying pressure, on the other hand, were development bank, hotel, insurance and manufacturing. Among these, the biggest gainer was the insurance sector, which gained 117.78 points to end the week at 9063.13 points.

“There is renewed interest in stocks of insurance companies because of indications that the insurers will soon raise their paid-up capital voluntarily,” said Poudel.

Two weeks ago, Himalayan General Insurance, for instance, announced its decision to issue 220 percent rights shares. “Investors are now expecting other insurance companies to follow suit,” Poudel said.

Last week, the shares of 158 listed companies were traded on the bourse, generating a turnover of Rs3.8 billion—down 55 percent than in the previous week. The trading amount fell last week because the market was open for only three days, against five days in normal weeks.

Published: 18-09-2016 08:57

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