Laxmi Capital News
Secondary market ends the year in red zone

The calendar year 2017 ended with the red signal at the Nepal StockExchange (Nepse) — the country’s sole secondary market. The capital marketwitnessed a bearish trend in the last four weeks of the year. The Nepse indexplunged by 122.89 points in the last four trading weeks.

With thebanks and financial institutions facing deposit crunch and increment in lendingrates, the secondary market index fell for the fourth consecutive week inbetween
December 24 and 28. The Nepse index descended by 3.89 per cent or 57.37 pointsto 1,414.78 points in the week. It has been on a continuous slide since theelections and has come to a nine-month low point.

Along withthe Nepse index, the sensitive and float indices also dropped. The sensitiveindex fell by 12.32 points or 3.97 per cent to 297.62 points and float indextumbled by 4.32 points or 4.09 per cent to 101.34 points.

Thesecondary market was open for four days during the week as against the normalfive days as Nepse was closed on Monday due to Christmas holidays.

Thebenchmark index opened at 1,472.15 points on Sunday and fell to 1,467.68 pointsby the end of the trading day. On Tuesday, it declined to 1,447.04 points. TheNepse index remained southbound on Wednesday and Thursday to rest at 1,425.51points and 1,414.78 points, respectively.

Investorsand analysts have said that the secondary market is under pressure due to theincreasing lending rates and deposit crunch in banks and financialinstitutions. They also informed that if the interest ratesdo not drop soon, the secondary market may fall further.

“Investorswere expecting the market to grow after the elections. However, though thepolitical environment was favourable, the problem of credit crunch hit thebanks and this has put pressure on investors,” said NawarajSubedi, chairman ofCapital Nepal Stock Market Investors Association. “This situation may drag onfor the next few days.”

Thesub-indices of financial sector had a negative impact on the secondary market. Thesub-index of class ‘A’ financial institutions fell by 4.32 per cent or 54.46points to 1,205.54 points during the review week. Share price of Nabil plungedby 5.13 per cent to Rs 1,090 per unit, Standard Chartered fell by 8.92 per centto Rs 1,900 per unit and share price of Prabhu Bank descended by 7.67 per centto Rs 325.

Similarly,the sub-index of development banks dropped by 87.49 points or 5.19 per cent to1,596.39 points. Share price of Muktinath Bikas Bank dropped by 23.62 per centto Rs 417 per unit and that of Mahalaxmi Bikas Bank fell by 3.88 per cent to Rs198 per unit.

Similarly,microfinance, finance and insurance sectors also slumped in review period. Themicrofinance sector fell by 3.53 per cent or 62.83 points to 1,719.25 points.Likewise, finance sector fell by 2.77 per cent or 20.76 points to 728.48 pointsand the insurance sector decreased by four per cent or 304.31 points to7,296.13 points.

Thesub-index of hydropower sector dropped to 1,918.7 points, down 71.36 points or3.59 per cent. Likewise, manufacturing sector lost 37.77 points or 1.49 pointsto 2,503.76 points.

The hotelsgroup fell by 29.82 points or 1.41 per cent to 2,086.85 points, the otherssector descended by 20.53 points or 2.42 per cent to 829.17 points and thetrading group dipped by 2.62 points or 1.32 per cent to 196.37 points.

Altogether,5.73 million shares of 174 firms worth Rs 2.68 billion were traded through27,153 transactions in the week. The traded amount was 4.01 per cent more thantotal weekly turnover of previous week. Standard Chartered Bank secured topposition in terms of total turnover with Rs 503.36 million. It was followed byNepal Telecom with Rs 236.07 million, Everest Bank with Rs 138.33 million,Nepal Life Insurance Company (Promoter) with Rs 110 million and Nepal LifeInsurance Company with Rs 75.16 million.

Prabhu Bank(Promoter) topped the list in terms of trading volume, with 348,000 of itsshares changing hands and Standard Chartered was forerunner in terms of numberof transactions — 4,693.

 

Company

Type

Units

Kisan Microfinance Bittiya Sanstha

Rights

78,000

Kanchan Development Bank

Rights

1,039,500

Sanima Mai Hydropower

Rights

10,550,000

Summit Microfinance Development Bank

Rights

716,560

 

Source: TheHimalayan Times, 31st December 2017

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