Selling pressure hits secondary market

Kathmandu, July 1

The Nepal Stock Exchange (Nepse) index plunged by 14.01 points or 1.17 per cent today — the first trading day of the week — to land at 1,184.53 points as there was selling pressure in the secondary market.

Stock market analysts have said that the uncertainty regarding government’s policy, pressure to pay back loans at the end of the fiscal year and increased supply of stocks along with the issuance of rights shares and further public offerings (FPOs) are the major reasons why the country’s sole secondary market is in a bearish trend.

Stock market analyst, Prakash Rajaure, said that the ongoing bear market could continue for a longer period if the government does not make any effort to take investors into ‘confidence’.

The benchmark index has been in a downward spiral since the last two years after hitting a record high of 1,881.45 points on July 27, 2016.

“The impending bear trend is discouraging investors to invest in the stock market,” said Rajaure. “And the government has not tried to win the trust of the investors.”

He mentioned that the government has to act responsibly by bringing in government financial institutions like Employees Provident Fund and Citizen Investment Trust as market makers in a bid to safeguard the small and medium investors.

The market sentiment has been hit time and again due to various statements made by the government. Also, the tax administration’s new rule — which is currently under review in the finance ministry — on calculation of capital gains tax on rights and bonus shares has demoralised investors, as per stock market investors.

Opening at 1,198.54 points today, the benchmark index was mostly southbound throughout the day. The sensitive index also dropped by 2.97 points or 1.18 per cent to 249.12 points and the float index fell by 1.09 points or 1.27 per cent to 84.95 points.

All the sub-indices recorded losses today in the country’s only trading bourse. The banking subgroup, which has the highest weightage in the benchmark index, dropped by 1.19 per cent  or 12.14 points to rest at 1,004.60 points.

The hotels subgroup dipped by 1.03 per cent or 18.64 points to land at 1,791.36 points. Similarly, manufacturing and production descended by 0.31 per cent or 6.99 points to rest at 2,261.23 points. Likewise, the insurance and hydropower sub-indices dipped by 1.48  per cent or 89.03 points and 1.07  per cent or 15.7 points to close the day at 5,931.55 and 1,456.57 points, respectively.

Development banks and finance subgroups also went down by 1.43 per cent or 20.14 points and one per cent or 6.16 points to land at 1,383.71 points and 607.79 points, respectively. Similarly, others and microfinance subgroups also descended by 0.49 per cent or 3.46 points and 1.63 per cent or 25.74 points to rest at 702.33 points and 1,553.58 points, respectively.

Altogether, 3,683 transactions of 619,741 shares of 158 firms worth Rs 197.26 million were undertaken today.