July 2 to July 31: Beed’s take on the market

During the review period from July 2 to July 31, 2023, the Nepal Stock Exchange (NEPSE) index declined by 48.62 points (-2.26%) to close at 2,106.18 points. The secondary market, which had seen a significant recovery in the previous review period, faced a downward momentum in this time and reached its lowest point on July 5 at 2,049.44 points. The recent monetary policy unveiled by Nepal Rasta Bank has failed to sustain the growth of the previous period. While the market initially had a positive reaction to the announcement, it gradually continued declining. The overall total market volume plummeted by 15.14% to reach Rs 65.186 billion.

During the review period, seven of the 10 sub-indices landed in the red zone contrary to the previous review period that saw all sub-indices in the green zone.

Life Insurance sub-index (-9.95%) was the biggest loser as the share value of Life Insurance Corporation Nepal (-Rs 195), Himalayan Life Insurance (-Rs 83.9), and Asian Life Insurance Company (-Rs 66.5) decreased substantially. Hydropower sub-index (-8.92%) was second in line with fall in the share prices of Arun Kabeli Power (-Rs 133.9), Shuvam Power (-Rs 84.8), and Mountain Energy Nepal (-Rs 79.9).

Microfinance sub-index (-6.69%) followed suit with decrease in the share prices of Upakar Microfinance (-Rs 145), Shrijanshil Microfinance (-Rs 120), and Sashana Microfinance (-Rs 108). Non-Life Insurance sub-index (-3.34%) also fell as share value of Nepal Insurance Company (-Rs 115), NLG Insurance Company (-Rs 89), and Sanima GIC Insurance (-Rs 60) went down.

Finance sub-index (-2.39%) decreased as share prices of Progressive Finance (-Rs 20.6), Janaki Finance (-Rs 20), and Manjushree Finance (-Rs 15) fell. Others sub-index (-2.18%) witnessed a decline in the share prices of Nepal Telecom (-Rs 28.5), and Nepal Reinsurance Company (-Rs 2). Likewise, Hotels and Tourism sub-index (-1.14%) saw a drop in the share values of Soaltee Hotel (-Rs 56.1), Taragaon Regency (-Rs 42.5), and Oriental Hotels (-Rs 23).

 Source: Nepal Stock Exchange

However, Development Bank sub-index (+0.49%) was able to make it into the green zone with an increase in the share prices of Corporate Development Bank (+Rs 35.8), Kamana Sewa Development Bank (+Rs 18.7), and Jyoti Development Bank (+Rs 15.2). Manufacturing and Processing sub-index (+1.60%) followed suit with increase in the share value of Unilever Nepal (+Rs 3,770) and Bottlers Nepal (+Rs 975). Commercial Bank sub-index (3.62%) was the biggest gainer with increase in share values of Everest Bank (+Rs 33.1), Sanima Bank (+Rs 28.9), and Global IME (+Rs 28.3).

News and Highlights

The Securities Board of Nepal (SEBON) has unveiled its policy and programmes for fiscal year 2023/24 which focuses on market development and expansion. SEBON has announced plans to revise the necessary laws to permit Non-Resident Nepalis (NRNs) to invest in the secondary market. It falls in line with SEBON’s commitment to increasing participation and developing a competitive environment. SEBON has also discussed reducing share trading costs associated with brokerage services, committing to a study for the same.

On the public issues front, SEBON has approved the Initial Public Offering (IPO) for four hydropower companies, three insurance companies and one investment company. The IPOs for hydropower companies are for Mid-Solu Hydropower worth Rs 748.4 million, Mandu Hydropower worth Rs 1.36 billion, Chirkhwa Hydropower worth Rs 400 million, and Mathillo Mailun Khola Hydropower worth Rs 1 billion. The respective issue managers are NIC Asia Capital, Prabhu Capital, RBB Merchant Banking, and Sanima Capital.

SEBON has approved IPOs of three insurance companies – Reliable Nepal Life Insurance worth Rs 4 billion, Sun Nepal Life Insurance worth Rs 3.2 billion, and Citizen Life Insurance worth Rs 3.75 billion. The respective issue managers are Civil Capital Market, Nepal SBI Merchant Banking, and NIBL Ace Capital.

Similarly, it also approved the IPO of Hathway Investment Nepal worth Rs 1.17 billion with Global IME Capital as the issue manager. The IPO of IME Ltd worth Rs 100 million is in its pipeline and under preliminary review. Prabhu Capital has been appointed as its issue manager.

Outlook

The decline in the current review period was primarily influenced by investors profit booking tendencies. As the fiscal year comes to a close, NEPSE generally experiences higher selling pressure as investors seek to realise gains to meet their obligations. Further, the provisions outlined in the monetary policy for the current fiscal year 2023/24 has failed to meet investor expectations, and thus the market has not been able to sustain the growth of the previous period. The market is likely to maintain its current momentum while investors await the annual financial figures of listed companies.  

This is an analysis from beed Management Pvt Ltd. No expressed or implied warrant is made for usefulness or completeness of this information and no liability will be accepted for consequences of actions taken on the basis of this analysis.