Beed’s take on the market
The Nepal Stock Exchange (NEPSE) index fell by 53.93 points (-2.58%) to close at 2,037.09 points in the review period between May 30 and June 30, 2024. During the review period, the market surged above 2,100 points. However, it failed to sustain the momentum as selling pressure has been mounting in the market as fiscal year-end approaches and investors look to book profits. Further, the lack of new primary issues in the market has dampened investor sentiment, underscoring a cautious market environment. Despite the drop, the overall market volume increased by 24% to reach Rs 95.39 billion.
During the review period, seven of the 11 sub-indices landed in the red zone. Commercial Bank sub-index (-6.62%) was the biggest loser as the share value of Nabil Bank (-Rs 37), Himalayan Bank (-Rs 20.7) and Sanima Bank (-Rs 20.3) decreased substantially. The Hotels and Tourism sub-index (-5.26%) followed suit with drop in the share prices of Kalinchowk Darshan (-Rs 74.6), Chandragiri Hills (-Rs 56.9) and Oriental Hotels (-Rs 34.7).
The Manufacturing and Processing sub-index (-5.01%) was next in line as it witnessed decline in share prices of Bottlers Nepal-Terai (-Rs 312.2), Himalayan Distillery (-Rs 169.1) and Sarbottam Cement (-Rs 85.2). Similarly, Life Insurance sub-index (-4.16%) saw decrease in share values of Life Insurance Corporation Nepal (-Rs 43.9), Nepal Life Insurance Co (-Rs 35.5) and IME Life Insurance (-Rs 31.9).
The Others sub-index (-3.32%) followed suit as the share prices of Himalayan Reinsurance (-Rs 38.4), Nepal Doorsanchar (-Rs 33) and Nepal Reinsurance (-Rs 32) went down. Non-Life Insurance sub-index (-2.78%) also decreased with drop in share prices of Rastriya Beema Company (-Rs 286), Shikhar Insurance (-Rs 35.8) and United Ajod (-Rs 27.1). Similarly, Development Bank sub-index (-2.67%) declined with dip in share values of Narayani Development Bank (-Rs 100), Shine
In the green zone, the Microfinance sub-index (+0.36%) saw a slight increase with rise in share prices of Samaj Laghubitta (+Rs 604), Ganapati Laghubitta (+Rs 422.1) and Swabhimaan Laghubitta (+Rs 163). Trading sub-index (+2.42%) was next in line with increase in the share prices of Salt Trading (+Rs 110) and Bishal Bazar Company (+Rs 74). Similarly, Hydropower sub-index (+3.28%) also saw growth with increased share values of Kutheli Bukhari Small Hydropower (+Rs 327), Mailung Khola Jal Vidhyut (+Rs 223) and Mandu Hydropower (+Rs 212.9). Finally, the Finance sub-index (+13.63%) was the biggest gainer in the review period as share prices of Nepal Finance (+Rs 464), Goodwill Finance (+Rs 136) and Sambriddhi Finance (+Rs 100) climbed up.
News and Highlights
Nepal Rastra Bank (NRB) amended its integrated directives allowing banks to issue preference shares to raise additional capital. As per the directive, NRB has laid out 12 conditions for issuing preference shares, including requiring them to be non-redeemable and perpetual, to not be issued with any collateral, and to only be held by institutional investors, among others. Moreover, preference shares can be considered Tier 1 capital instruments under the Capital Adequacy Framework, thus seeking to bolster financial stability.
The process of appointing the chairperson for Securities Board of Nepal (SEBON) has been terminated. As per the Securities Act, the selection committee is required to recommend at least three candidates to the Council of Ministers. However, three of the five candidates did not show up at the presentations and interviews for the appointment on June 16, leading to the committee not having enough names to recommend. With the process scrapped, the position for the chairperson will continue to remain vacant. In an effort to not disturb the administrative functions of SEBON any longer, Joint Secretary of the Ministry of Finance, Narendra Kumar Rana, has assumed the responsibilities of the Chairperson until an appointment is made. Due to this, SEBON has started seeing some movement in the issuance of securities after a six-month gap.
SEBON has approved the initial public offering of Reliance Spinning Mills for the general public under the Manufacturing and Processing sector. The issue is worth Rs 948.81 million at a premium rate of Rs 820.8 per unit. Global IME Capital has been appointed the issue manager. SEBON has also approved the right share issue of Himalayan Urja Bikas Company worth Rs 9.90 million. Nabil Investment Banking will serve as its issue manager.
Outlook
As SEBON gradually releases pending public primary issues from its backlog, the market anticipates increased capital flow. Further, the market is likely to continue experiencing selling pressure as the end of Fiscal Year 2023/24 approaches as both individual and institutional investors adjust their portfolios and book profits. However, new political developments and upcoming monetary policy for FY 2024/25 are likely to influence the market course.
