Secondary market in bearish trend

Kathmandu, November 3

The country’s sole secondary market witnessed a downward trend in the past week due to the problem of liquidity crisis being faced by banks and financial institutions (BFIs).

“Investors were not able to avail any additional funds from banks and financial institutions to invest in shares,” said Ambika Prasad Poudel, chairman of Nepal Investors Forum.

However, Poudel clarified that the market is moving in its usual direction as there is hardly any transaction in the share market during the festive season. “Share investors are again withdrawing money from BFIs to celebrate Tihar. Before Dashain too investors withdrew huge sums of money from BFIs,” he stated, adding that it will take a couple of weeks more for the money that is withdrawn in the festive season to return to the banking channel.

“Hence, BFIs do not have surplus funds at the moment to lend to share investors,” Poudel informed. “Moreover, the central bank has not done anything substantial to manage the liquidity crisis.”

In trading week between October 28 to November 1, the Nepal Stock Exchange (Nepse) index went down by 1.62 per cent or 20.13 points.

Similarly, the sensitive index also dropped by 1.64 per cent or 4.34 points to 259.67 points and the float index decreased by 1.84 per cent or 1.66 points to land at 88.7 points.

In the review period, weekly turnover increased by 18.89 per cent as compared to the previous week to Rs 1.21 billion. In the previous week the market witnessed turnover of Rs 1.01 billion. Likewise, the daily average turnover also went up to Rs 242.36 million, which was an increment of 18.89 per cent in comparison to the previous week when it stood at Rs 203.86 million.

The secondary market had opened at 1,241.11 points on Sunday and plunged by 13.62 points by the end of the trading day. On Monday, the market was again down by 10.56 points. The local bourse, however reversed course to rise by 7.43 points on Tuesday. However, immediately the next day it fell by 2.90 points and again decreased by 0.48 point on Thursday to close the week at 1,220.98 points.

In the review week, the trading subgroup did not witness any transaction and only the manufacturing sub-index landed in the green zone, increasing by 0.67 per cent or 15.23 points to 2,289.29 points due to share price of Unilever Nepal ascending by Rs 468 to Rs 23,899.

Meanwhile, the hydropower sub-index was the biggest loser in the week, plunging by 3.13 per cent or 42.22 points to 1,308.25 points. Share value of Chilime Hydropower decreased by Rs 17 to Rs 702.

Likewise, hotels subgroup fell by 2.74 per cent or 51.84 points to 1,842.96 points, due to share price of Soaltee dipping by nine rupees to Rs 246. The microfinance sub-index too dropped by 2.09 per cent or 30.68 points to 1,435.79 points with share value of Forward Community falling by Rs 84 to Rs 2,010.

Meanwhile, banking plunged by 1.99 per cent or 21.99 points to 1,079.67 points.The share price of Standard Chartered dipped by
seven rupees to Rs 691. Likewise, the finance sub-index declined by 1.77 per cent or 11.01 points to 609.5 points. Similarly, the non-life insurance subgroup went down by 1.65 per cent or 94.53 points to 5,611.66 points as the share price of RastriyaBeema dipped by Rs 162 to Rs 9,589. The development bank sub-index also fell by 0.94 per cent or 14.16 points to 1,477.1 points.

Others subgroup, meanwhile, also went down by 0.39 per cent or 2.93 points to 740.94 points. Likewise, life insurance sub-index inched down by 0.30 per cent or 16.82 points to 5,546.25 points.

In review week, Prabhu Bank was the leader in terms of weekly turnover with Rs 72.4 million. It was followed by NIC Asia Bank with Rs 65.72 million, Life Insurance Corporation (Nepal) with Rs 45.65 million, Janata Bank with Rs 43.33 million and Global IME Bank with Rs 43.12 million.

In terms of weekly trading volume too, Prabhu Bank took the lead with 295,000 of its shares changing hands. Gurkhas Finance (Promoter) with 258,000 shares, Janata Bank with 233,000 shares, Mega Bank with 198,000 shares and NIC Asia Bank with 154,000 shares were other top firms to record high trading volume. Meanwhile, Kalika Power Company topped the chart in terms of number of transactions — 1,484. It was followed by Panchakanya Mai Hydropower with 1,021, Prabhu Bank with 678, Nepal SewaLaghubittaBittiyaSanstha with 660 and NadepLaghubittaBittiyaSanstha with 608 transactions.

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