During the review period of July 1 to July 29, the Nepal Stock Exchange (NEPSE) index grew significantly by 622.39 points (+30.53%) to close at 2,661.09 points. It reached its highest point on July 28 at 2,681.56 points. The review period was marked by strong upward movement as investors enthusiastically awaited the monetary policy for the current fiscal year 2024/25. Further, the response to the new provisions in the monetary policy has been encouraging as the market continues to grow. The total market volume during the review period increased by a whopping 120% to reach Rs 210.21 billion.

Figure 1 NEPSE Index during the review period July 1 to July 29, 2024

Source: Nepal Stock Exchange

During the review period, 11 of the sub-indices landed in the green zone. The Commercial Bank sub-index (+47.38%) was the biggest winner as the share value of Nabil Bank (+Rs 197), Nepal SBI Bank (+Rs 151.6) and Everest Bank (+Rs 146) increased substantially. Trading sub-index (+30.93%) followed suit with a rise in share prices of Salt Trading Corporation (+Rs 1,505) and Bishal Bazar Company (+Rs 529).

Development Bank sub-index (+28.68%) was next in line as the share value of Excel Development Bank (+Rs 146), Shine Resunga Development Bank (+Rs 136.5) and Green Development Bank (+Rs 128.1) went up. Similarly, Life Insurance sub-index (+27.85%) saw an increase in share prices of Life Insurance Corporation Nepal (+Rs 299), Nepal Life Insurance (+Rs 259) and Asian Life Insurance (+Rs 177). Hotels and Tourism sub-index (+26.73%) witnessed a rise in share values of Chandragiri Hills (+Rs 352.9), Taragaon Regency Hotel (+Rs 284.5) and Oriental Hotels (+Rs 178.7). Finance sub-index (+26.29%) also grew with increased share prices of Nepal Finance (+Rs 659), Goodwill Finance (+Rs 181) and Janaki Finance (+Rs 169.1).

Non-Life Insurance sub-index (+25.83%) saw a rise in share values of Rastriya Beema Company (+Rs 5,350), Siddhartha Premier Insurance (+Rs 189) and Shikhar Insurance (+Rs 181.8). Hydropower sub-index (+25.21%) followed suit with increased share values of Asian Hydropower (+Rs 377), Mandakini Hydropower (+Rs 280) and Chilime Hydropower (+Rs 164.3).

Manufacturing and Processing sub-index (+22.63%) also saw significant increase with rise in share prices of Unilever Nepal (+Rs 6,100), Bottlers Nepal-Terai (+Rs 4,199) and Himalayan Distillery (+Rs 442.1). Others sub-index (+21.29%) was next in line with the increased share values of Muktinath Krishi (+Rs 205), Nepal Telecom (+Rs 170) and Nepal Reinsurance (+Rs 150). Finally, Microfinance sub-index (19.93%) gained as the share prices of Upakar Microfinance (+Rs 850), Atmanirbhar Microfinance (+Rs 559) and National Microfinance (+Rs 380.5) climbed up.

Table 1 Sub-indices during the review period July 1 to July 29, 2024

Source: Nepal Stock Exchange

News and Highlights

Nepal Rastra Bank (NRB), after a slight delay, unveiled its monetary policy for fiscal year 2024/25 which has taken an expansionary approach. The market has reacted positively to it, with increased trading volume and a circuit break on July 28; the first trading day following the policy announcement. The policy has abolished the ceiling of Rs 200 million for institutional investors on margin-lending by banks and financial institutions (BFIs), providing more flexibility and energising the market. It has also lowered the provision requirement for good loans from 1.2% to 1.1%, which is expected to increase bank profitability. Additionally, through the monetary policy guidelines, the NRB has allowed BFIs to include the interest income earned in mid-July to mid-August in their financial statements for previous fiscal year 2023/24.

On the initial public offering (IPO) side, SEBON has halted the IPO issue of Reliance Spinning Mills following accusations that it submitted fake financial details during the approval process and for allegedly not listing dues amounting to Rs 753.68 million that it owed to Nepal Electricity Authority. Meanwhile, SEBON has approved the further public offering (FPO) of Suryodaya Womi Microfinance worth Rs 4.67 million. Kumari Capital Ltd has been appointed as its issue manager.

Outlook

The market has been receptive to the new monetary policy provisions and its attempts at strengthening the capital market. In particular, BFIs are expected to experience improved profitability. However, investors remain vigilant of possible indicators of trend reversals. While the outlook remains cautiously optimistic, there is a need to monitor market events within a specified range.

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