During the review period of June 23 to July 18, the Nepal Stock Exchange (NEPSE) index went up by 8.13 points (+0.64%) to close at 1272.50 points. Contrary to the previous review period, the investors showed some renewed hopes as the fiscal policy has indicated continued commitment of government towards merger between financial institutions especially commercial banks, while also adopting similar strategy with insurance companies. Nonetheless, investors seem cautious on taking new positions as they await the monetary policy for the fiscal year. It was reflected in the market volume at the end of the period; the total market turnover during the period fell by -16.03% and stood at Rs 9.71 billion.
During the review period, contrary to the previous period, six sub-indices landed in the green zone while four sub-indices landed in the red zone. The Development sub-index (+2.50%) was the biggest gainer as share value of Muktinath Bikas Bank (+Rs 14) went up. Microfinance sub-index (+2.50%) was second in line with equal percentage increase as the share value of Mahuli Samudayik (+Rs 132) and NMB Microfinance (+Rs 78). Following this, Finance sub-index (+1.61%) increased with the rise in the share value of world Guheshowori Merchant Bank & Finance (+Rs 8) and Goodwill Finance (+Rs 7). The Hydropower sub index (+1.15%) also went up with increase in the share value of Upper Tamakoshi (+Rs 17). Likewise, Commercial bank (+1.10%) gained with rise in the share value of Nepal Bank (+Rs 21) and Standard Chartered Bank (+Rs 17). Similarly, Manufacturing and Processing sub-index (+0.24%) increased marginally as the share value of Bottlers Nepal (+Rs 386) increased.
On the losing side, Non-life insurance sub-index (-2.57%) faced the biggest drop as the share value of Premier Insurance (-Rs 513) and Rastriya Beema Company (-Rs 350) went down. Similarly, Life Insurance sub-index (-1.16%) went down with the decrease in the share value of Gurans Life Insurance (-Rs 39). The Others sub-index (-0.69%) followed suit with the decrease in share value of Citizen Investment Trust (-Rs 31) and Nepal Telecom (-Rs 1). Likewise, Hotels sub-index (-0.38%) fell as the share value of Oriental Hotels (-Rs 11) and Taragaon Regency Hotel (-Rs 3) decreased.
News and Highlights
The Securities Exchange Board of Nepal (SEBON) has released the policies and programs for the current fiscal year 2019/2020. Some of the key priorities outlined are: to facilitate the opening of a second stock exchange, to adopt practical book building system, to allow shareholders to apply more right shares than their actual holdings amongst others. Also, it has ensured the participation of manufacturing companies having capital worth Rs one billion in the capital market. Likewise, SEBON has also considered the facilitation of automated trading system of over-the-counter (OTC) market and enforcing insider trading related regulation.
Likewise, SEBON has also issued the new Share Issue Directives of Hydropower Companies 2019. As per the new directive, hydropower companies are permitted to issue right shares as well as make follow-on public offers (FPO) after two years of their initial public offerings (IPO). Likewise it has increased the lock-in period of promoter shares of listed hydropower companies. Raising the lock-in period is an attempt to catch up with international standards and practices of the capital market while also ensuring safety of the investments.
On the public issue front, Initial Public Offerings (IPOs) of two hydropower companies namely, Himal Dolkha Hydropower Company (7,672,210 units worth Rs 1.6 billion) and Nyadi Hydropower Limited (4,500,000 units worth Rs 405 million) were issued. Care Ratings Nepal Limited (CRNL) has assigned ‘CARE-NP IPO Grade 4’ to both of these issues, indicating below average fundamentals of the company. Likewise, Sabaiko Microfinance Limited issued IPO of 530,000 units worth Rs 53 million during the review period.
Outlook
On a positive note, the policies and programs released by SEBON for the fiscal year 2019/20 has outlined new measures which is crucial for the systematic growth of the capital market. As investors seems to be in ‘watch and wait’ position, the provisions in Monetary Policy for FY 2019/20 is expected to play a significant role in shaping investor confidence level as almost 80% of market is dominated by scrip’s of financial institutions. Further, the market direction will also be affected by the annual financial results of listed companies which will start rolling out in coming days.
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.
