Nepse begins 2017 on a cautious note

- Post Report, Kathmandu
The index, which opened at 1443.38 points on Sunday, hit a weekly high of 1482.85 points on Monday, before closing for the week at 1454.14 points on Thursday

Jan 8, 2017-Nepal Stock Exchange (Nepse) index gained 10.8 points, or 0.7 percent, in the first trading week of 2017, as nervous share market players placed ‘buy’ orders warily, reflecting a weak investor confidence.

The index, which opened at 1443.38 points on Sunday, hit a weekly high of 1482.85 points on Monday, before closing for the week at 1454.14 points on Thursday, the last trading day of the week. The moderate gain came on the back of hike in shares of commercial and development banks, and hydroelectric companies.

“Although the market received buy orders, the volume of shares that were bought was low. This indicates investors are still looking for opportunities to buy shares at lower prices,” said Deepesh Vaidya, managing director of Kriti Capital & Investments.

Lately, there has been decline in number of shares trading hands at the stock market. This is reflected by daily trading amount, which hit a low of Rs328.9 million on Wednesday. 

Till 2015, the stock market used to see daily share transaction of around Rs500 million. This figure crossed Rs1-billion mark for the first time on March 16, 2016 and hit an all-time high of Rs2.75 billion on July 16, 2016. Since then, the daily share transaction amount has hovered around Rs1 billion.

But with the erosion in investor confidence, daily share transaction amount has fallen.

“The market is currently looking for clarity,” said Vaidya. “Currently, it is said the banking sector is facing liquidity crunch. But nobody knows how bad the situation is. Also, it is said credit rates will rise, as some of the banks have started increasing interest. But no one is quite sure about how expensive will the credit be.”

Once investors get clear-cut hints on liquidity position and credit rates, the market will move in a stable manner in the short-run, according to Vaidya. 

Last week, the biggest gainer was the commercial banking sector, which saw a hike of 21.8 points in its sub-index. The second best performer was the hydro sector. Hydro sub-index gained 12.9 points, followed by development banking sub-index, which went up by 8.11 points. The worst performer, on the other hand, was the insurance sector, which saw its sub-index slide by 115.74 points.

In 2016, the stock market had emerged as one of the best places to invest, as credit rates had fallen due to excess liquidity in the banking system, stock market had embraced paperless share transaction system, and banks and financial institutions had rapidly started increasing capital stock by floating bonus and rights shares.

As a result Nepse index had hit an all-time high of 1,881.45 points on July 27.

Considering the developments of 2016, 2017 didn’t begin on a very good note, said Vaidya. 

“But investors are not very pessimistic either.”


Published: 08-01-2017 09:16

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