During the review period of December 23, 2018 to January 22, 2019, the Nepal Stock Exchange (NEPSE) index rose by 2.86 points (+0.25%) and closed at 1,168.83 points. The market witnessed a significant jump in the trading volume during the period with single day trading turnover crossing over Rs one billion on December 27. Overall trading volume during the review period surged by 33% and the total market turnover stood at Rs 9.44 billion.
During the review period, seven sub-indices landed in the green zone while two sub-indices landed in red zone. The Life-Insurance sub-index (+13.58%) led the pack of gainers with increase in share value of Life Insurance Co. (+Rs 220), Nepal Life Insurance (+Rs 145) and Gurans Life Insurance (+Rs 95). Similarly, Microfinance sub-index (+8.11%) was second in line with jump in share value of National Microfinance (+Rs 330), Womi Microfinance (+Rs 256) and Unnati Microfinance (+Rs 213). Likewise, Non-Life Insurance sub-index (+5.28%) followed suit with increase in share value of United Insurance (+Rs 100) and Premier Insurance (+Rs 96). Finance sub-index (+2.54%) went up with increase in share value of Hathway Finance (+Rs 5) and Gurkhas Finance (+Rs 5). This was followed by Hydropower sub-index (+2.54%); top gainers in this sub-index were Nagadi Group Power (+Rs 12) and Chhyangdi Hydropower (+Rs 7). Others sub-index (+2.41%) gained value with surge in the share value of Citizen Investment Trust (+Rs 954). Similarly, Hotels sub-index (+1.47%) went up with rise in share value of Soaltee Hotel (+Rs 6) and Taragaon Regency (+Rs 3).
On the losing side, Commercial Bank sub-index (-2.77%) went down with decrease in share value of Nepal Investment Bank (-Rs 129) and Bank of Kathmandu (-Rs 72). Similarly, Development Bank sub-index (-1.19%) went down with decrease in share value of Kailash Development Bank (-Rs 27) and Purnima Development Bank (-Rs 14).
News & Highlights
Securities Board of Nepal (SEBON) has directed NEPSE to provide: broker license to commercial banks and to enable them to create a subsidiary company for the purpose, change the system of circuit breaker to match international practices, create Investors Protection Fund for the protection of the rights of investors, develop necessary technological requirements for making the OTC market operational and provide approval to Employees Provident Fund (EPF), Citizen Investment Trust (CIT), Social Security Fund (SSF) and stock traders to work as market maker or dealer. Besides, SEBON has also directed CDS and Clearing Limited for the creation of Settlement Guarantee Fund for ensuring necessary payments and to decrease the clearance period to T+1 day from previous T+3 days after full implementation of online trading.
Nepal Rastra Bank has raised the margin lending ceiling on loan-to-value ratio to 65% from the earlier provision of 50%. NRB has also reduced the risk weight for Banks and Financial Institutions (BFIs) for loans extended on the back of securities to 100% from 150%. Further, NRB has allowed commercial banks to establish subsidiary brokerage firms. These regulatory changes were made by SEBON and NRB on the basis of recommendations given by the committee formed by the Ministry of Finance to study various aspects that have been challenging the financial stability of the country ranging from volatility in bank interest rates and fluctuations in the capital market.
On the public issue front, Ghalemdi Hydro Limited issued Initial Public Offering (IPO) worth Rs 155.58 million. Meanwhile, SEBON has approved IPO worth Rs 192.5 million and Rs 67.4 million of Panchthar Power Company and Asha Microfinance respectively. Both the issues have been assigned IPO Grade 4 by care ratings indicating below average fundamentals.
Outlook
Market interest rates were expected to come down post second quarter of this financial year. However, the rates are yet to come down which is negatively affecting the capital market. Further, despite implementation of major recommendations given by the special committee, there hasn’t been a significant turnaround in the market as investor confidence remains low. Unless, the interest rate volatility stabilises, the market is likely to remain subdued.
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.
