Monetary Policy fails to lift benchmark index

Kathmandu, July 14

As the government failed to fully address the concerns raised by share investors through the recently unveiled Monetary Policy 2018-19, the Nepal Stock Exchange (Nepse) index continued its downward spiral in the trading week between July 8 and 12, dropping by 2.64 per cent or 32.43 points to retreat below 1,200-point threshold.

Nepal Rastra Bank had unveiled the Monetary Policy 2018-19 on Wednesday.

“The government has failed to address the immediate concerns of stock investors. We had anticipated the Monetary Policy to come up with programmes that would attract investors to the stock market, but it failed to live up to our expectations,” said Uttam Aryal, chairman of Nepal Investors Association.

The Monetary Policy has introduced a provision whereby banks and financial institutions (BFIs) cannot make a margin call until the price of stocks (pledged as collateral) plunges by 20 per cent against the earlier provision of 10 per cent. However, it has curtailed the opportunity for margin lending. BFIs are no longer allowed to lend more than 25 per cent of their core capital against the collateral of stocks, which was at 40 per cent earlier.

“Due to the 25 per cent cap placed by the Monetary Policy on margin lending, it will be difficult for investors to avail loans from the BFIs,” added Aryal.

The Nepse index, which had opened at 1,224.41 points on Sunday, had lost 0.02 point by the end of the day to close at 1,224.39 points. Nepse dropped by 17.96 points on Monday to land at 1,206.43 points and shed 0.5 point on Tuesday to close at 1,205.93 points.

The local bourse descended by 0.29 point on Wednesday to 1,205.64 points and shed a further 13.66 points on Thursday to close week at 1,191.98 points.

Similarly, sensitive index went down by 2.48 per cent or 6.41 points to 251.05 points and float index slumped by 2.79 per cent or 2.46 points to 85.54 points.

In the review period, all subgroups landed in the red zone.

The hotels sub-index was the biggest loser of the week, plunging by 5.62 per cent or 105.81 points to 1,773.77 points. Soaltee’s share price went down by Rs 17 to Rs 230 and that of Oriental Hotel by Rs 19 to Rs 520.

The insurance sub-index fell by 4.08 per cent or 255.79 points to land at 6,008.94 points with Nepal Life’s share price decreasing by Rs 42 to Rs 1,000. Similarly, the hydropower subgroup dropped by 4.07 per cent or 60.99 points to close the week at 1,437.12 points. Chilime Hydropower Company’s share price dropped by Rs 30 to Rs 740.

Meanwhile, the microfinance sub-index dipped by 3.02 per cent or 49.55 points to 1,587.91 points, with Chhimek Laghubitta Bittiya Sanstha’s share value going down by Rs 14 to Rs 855. The development banks subgroup also went down by 2.54 per cent or 36.60 points to land at 1,401.86 points. Jyoti Bikas Bank saw its share value drop by eight rupees to Rs 136.

The banking subgroup fell by 2.40 per cent or 24.83 points to rest at 1,009.66 points. Everest Bank’s share price went down by Rs 12 to Rs 660 and Himalayan Bank’s share value was down by eight rupees to Rs 547.

The finance subgroup descended by 1.97 per cent or 12.20 points to 604.36 points. Likewise, trading subgroup shed 1.71 per cent or 3.38 points to 194.16 points. Meanwhile, the manufacturing sub-index dipped by 1.32 per cent or 29.81 points to 2,222.25 points. This was due to Unilever Nepal Ltd’s share price dropping by Rs 403 to Rs 25,000.

Likewise, others subgroups dropped by 0.80 per cent or 5.76 points to 708.66 points with Nepal Telecom’s share price
falling by four rupees to Rs 724.

Altogether, 6.11 million shares of 191 companies worth Rs 2.11 billion were traded through 24,370 transactions during the week. The traded amount was 58.44 per cent higher than the total weekly turnover of the previous week, which was recorded at Rs 1.04 billion. In the past week, 3.67 million shares of 186 companies had changed hands through 15,848 transactions.

In the review period, Everest Insurance took the lead in weekly turnover category with Rs 152.5 million. It was followed by Prime Life Insurance (Promoter) with Rs 107.24 million, Nepal Telecom with Rs 74.44 million, Laxmi Bank with Rs 73.74 million and Chhimek Laghubitta Bittiya Sanstha with Rs 68.06 million.

Similarly, in terms of trading volume, Kumari Bank (Promoter) was the leader with 390,000 units of its shares changing hands and in terms of number of transactions, Rairang Hydropower Development Company was at the top with 1,449 transactions.