Investors flock to banking shares

Kathmandu, September 29

The country’s sole secondary market has been buoyed with banks and financial institutions (BFIs) reporting impressive profits and reducing the lending rates on margin loans, as per share investors.

“BFIs have started making margin loans easily accessible along with increased liquidity in the market, which has helped investors increase their investment in the share market,” said Ambika Prasad Poudel, chairman of Nepal Investors’ Forum, explaining the increase in trading volume and turnover in recent days.

Moreover, while the association of commercial banks had assured to lower lending rates on margin loans to 10 per cent, Poudel said one class ‘A’ financial institution is currently offering loans against collateral of shares at below seven per cent.

Due to all these reasons, the share market rose by 0.96 per cent or 12.11 points in the trading week between September 23 and 27, mostly propelled by increased demand for banking stocks.

Even as the Nepal Stock Exchange (Nepse) was open only for four days, as the market remained closed on Monday in celebration of Indra Jatra, the weekly turnover, trading volume and number of transactions all went up in review period.

Altogether, 16.72 million shares of 189 companies worth Rs 3.31 billion were traded through 32,602 transactions during the week. The traded amount was 26.02 per cent higher than the total weekly turnover of the previous week, which was recorded at Rs 2.62 billion. In the past week, 9.70 million shares of 189 companies had changed hands through 27,700 transactions.

Opening at 1,255.07 points on Sunday, the benchmark index had gone up by 2.61 points by the end of the day. On Tuesday, the market soared by 22.37 points. However, the local bourse changed course thereafter, dipping by 2.31 points on Wednesday and falling by 10.56 points on Thursday to close the week at 1,267.18 points.

Similarly, sensitive index rose by 1.18 per cent or 3.14 points to 269.23 points and the float index also went up by 1.53 per cent or 1.40 points to 92.38 points.

Others, non-life insurance, hydropower and microfinance subgroups landed in the red zone during the review week.

Others subgroup fell by 1.68 per cent or 12.82 points to 746.25 points, because of share price of Nepal Telecom down Rs 19 to Rs 775.

Non-life insurance sub-index went down by 1.48 per cent or 89.27 points to 5,934.28 points, hydropower shed 0.76 per cent or 10.89 points to 1,412.19 points, and microfinance sub-index slipped by 0.57 per cent or 8.87 points to 1,538.98 points.

Among the gainers, trading soared by 5.89 per cent or 12.50 points to 224.39 points. The share value of Bishal Bazar Co went up by Rs 73 to Rs 1,733. Banking — subgroup with the highest weightage in country’s secondary market — surged by 2.10 per cent or 23.10 points to 1,118.94 points. This was due to shares of commercial banks like NIC Asia jumping by Rs 15 to Rs 438.

Development banks increased by 1.89 per cent or 28.70 points to 1,544.33 points, due to Deva Bikas Bank’s share price rising by four rupees to Rs 145.

Hotels sub-index climbed up 1.76 per cent or 33.29 points to 1,920.7 points.

Manufacturing subgroup advanced by 0.74 per cent or 17.33 points to 2,345.85 points. Finance sub-index ascended by 0.61 per cent or 3.79 points to 617.24 points.

Similarly, life insurance subgroup inched up by 0.26 per cent or 15.30 points to 5,695.54 points.

In the review period, Prabhu Bank took the lead in terms of weekly turnover and number of transactions — registering 1,827 transactions worth Rs 233.61 million. Meanwhile, Capital Merchant Bank took the lead in terms of trading volume, with 3.85 million of its shares changing hands in the week.

NIC Asia Bank with Rs 178.34 million, NMB Bank with Rs 169.18 million, Nepal Bank with Rs 160.03 million and Kumari Bank with Rs 143.51 million were the other top firms in terms of weekly turnover.

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