Beed’s take on the market

During the review period of August 1 to August 30, 2023, the Nepal Stock Exchange (NEPSE) index declined by a whopping 115.47 points (-5.48%) to close at 1,990.59 points. The secondary market continued its downward momentum in the review period and reached its lowest point on August 30, the final date of the review period. The government has been unable to introduce new revisions to excite the market, especially after businesses had a mixed reaction following the monetary policy for the current fiscal year in the previous review period. Resultantly, the market has been unable to sustain the growth seen in the previous period. The overall total market volume plummeted by 41.24% to reach Rs 38.30 billion.

During the review period, all ten sub-indices fell in the red zone, indicating the impact across all sectors.

Hydropower sub-index (-11.64%) was the biggest loser as the share value of Upper Tamakoshi (-Rs 182.5), Shuvan Power (-Rs 88.9), and Mountain Energy Nepal (-Rs 80) decreased substantially. Manufacturing and Processing sub-index (-9.95%) was second in line as it witnessed a fall in the share prices of Unilever Nepal (-Rs 1,840), Bottlers Nepal (-Rs 1,024), and Himalayan Distillery (-Rs 305).

Finance sub-index (-9.07%) followed suit with decrease in the share prices of Progressive Finance (-Rs 127.7), Goodwill Finance (-Rs 61.9), and Central Finance (-Rs 52.9). Likewise, Microfinance sub-index (-7.06%) also fell as the share value of Aatmanirbhar Microfinance (-Rs 235), Mahila Microfinance (-Rs 214.8), and Nesdo Microfinance (-Rs 205) went down.

Others sub-index (-5.60%) went down as share prices of Nepal Reinsurance Company (-Rs 80.7), and Nepal Telecom (-Rs 21.5) declined. Development Bank sub-index (-5.08%) also decreased with a fall in the share value of Kamana Sewa (-Rs 42.2), Corporate Development (-Rs 34.7), and Saptakoshi Development (-Rs 32).

Life Insurance sub-index (-5.02%) witnessed a decline in the share prices of Himalayan Life (-Rs 44), Suryajyoti Life (-Rs 44), and Nepal Life Insurance (-Rs 37). Likewise, Non-Life Insurance sub-index (-4.13%) saw a decrease in the share values of Rastriya Insurance (-Rs 500), Shikhar Insurance (-Rs 60.9), and IGI Prudential (-Rs 49).

Commercial Bank sub-index (-3.12%) was also on the losing end with a fall in share prices of Nabil Bank (-Rs 27.7), Prime Commercial Bank (-Rs 25.6), and Prabhu Bank (-Rs 19). Hotels and Tourism sub-index (-1.06%) followed suit with decline in the share value of Kalinchowk Darshan (-Rs 90), Chandragiri Hills (-Rs 87), and Taragaon Regency (-Rs 6.5).

Table 1 Sub-indices during the review period (July 2 to July 31, 2023)

Source: Nepal Stock Exchange

News and Highlights

The government has approved the Securities Registration and Issuance (Seventh Amendment) Regulations 2080 which eases the process for companies to issue primary shares. Companies with over Rs 1 billion in paid-up capital can issue premium primary shares immediately after converting to a public company. Those with less than Rs 1 billion paid-up capital will, however, need to maintain a three-year waiting period. Additionally, the revised regulations have also paved the way for the issuance of green bonds.

On the public issues front, Securities Board of Nepal (SEBON) has approved the Initial Public Offering (IPO) of Sonapur Minerals and Oil under manufacturing and processing sector worth Rs 3.07 billion, and Vision Lumbini Urja under hydropower sector worth Rs 1.91 billion. The respective issue managers are NIMB Ace Capital and Muktinath Capital. Likewise, SEBON has also kept the IPO of Daramkhola Hydro Energy worth Rs 395 million in its pipeline under preliminary review. Laxmi Capital Market has been appointed as its issue manager.

SEBON has also added the rights shares of Arun Valley Hydropower Development worth Rs 1.87 billion and Ridi Power Company worth Rs 774 million in its pipeline. Muktinath Capital has been appointed the issue manager for both.

Outlook

The market continued its downward momentum in the review period as interest rates continued to remain high despite some ease in the liquidity position in the banking system. On a positive note, the timely amendment of the Securities Registration and Issuance (Seventh Amendment) Regulations 2080 is expected to encourage companies from the real sector to go public, further deepening the market. The market is likely to maintain its current momentum while investors await the declaration of dividends by listed companies from the previous fiscal year’s earnings.

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.