During the review period of July 24 to August 21, Nepal Stock Exchange (NEPSE) index went down by 10.61 points (-0.89%) and closed at 1183.89 points. At the end of the review period, the market showed some signs of recovery as it gained almost 50 points to bounce above 1200 points, driven mostly by attractive annual figures of listed companies. Nonetheless, the market couldn’t withstand the brief growth as selling pressure mounted in the secondary market. Furthermore, the trading volume during the review period plunged by 23% as investor confidence continued to weaken. The total market turnover stood at Rs 4.34 billion.
During the review period, six sub-indices landed in the red zonewhile four sub-indices landed in the green zone.
The Life Insurance sub-index (-5.63%) led the pack of losers with the decrease in share value of Nepal Life Insurance (-Rs 81), National Life Insurance (-Rs 58), Gurans Life Insurance (-Rs 46) and Surya Life Insurance (-Rs 39). Similarly, Microfinance sub-index (-5.12%) was second in line with slump in share value of Womi Microfinace (-Rs 265), Swadeshi Microfinance (-Rs 220), Nag Beli Microfinance (-Rs 197) and Kalika Microfinance (-Rs 125). Likewise, Hydropower sub-index (-4.44%) followed suit with decrease in share value of Chilime Hydropower (-Rs 35) and Himalayan Power Partner (-Rs 23). Non-Life Insurance sub-index (-3.18%) went down with the decrease in the share value of Rastriya Beema (-Rs 199), Everest Insurance (-Rs 104) and Prudential Insurance (-Rs 42). This was followed by Manufacturing & Processing sub-index (-1.88%); top loser in this sub-index wasUnilever Nepal (-Rs 1499). Likewise, Finance sub-index (-1.09%) shed value with the decrease in the share value of Progressive Finance (-Rs 42), Best Finance (-Rs 20) and ICFC Finance (-Rs 11).
Hotel Sub-index (+ 2.21%) led the gainers with the rise in the share value of Soaltee Hotel (+Rs 9). Development Bank sub-index (+1.45%) followed with increase in share value of Mahalaxmi Development (+Rs 18) and Garima Development (+Rs 11). Likewise, Commercial Bank sub-index (+0.52%) followed suit with increase in share value of Nabil Bank (+Rs 40), Agriculture Development (+Rs 20) and Nepal Investment Bank (+Rs 18). Likewise, Others’ sub-index (+0.71%) gained with increase in the share value of Nepal Telecom (+Rs 10).
News & Highlights
The Securities Board of Nepal (SEBON) has approved a revision on listing of securities’ fees that Nepal Stock Exchange (NEPSE) can charge on the listed securities.The approval of the fees, including annual fee, from SEBON paves the way for public companies, whose proposal was pending due to the lack of listing bylaws, to list their securities for trading in the secondary market.
NEPSE is preparing to allow margin trading through stock brokering firms as Nepal Rastra Bank (NRB) has endorsed the ‘Guidelines on margin lending facility from stockbrokers’. As per the guidelines, the stockbroker that is allowed to provide margin lending facility by the central bank can do so for the securities of only those companies allowed by NEPSE. The broker firms can lend up to two times of the net worth of their company and up to 50% of the market value of the collateral. NEPSE’s next board meeting is supposed to discuss the necessary preparations to start margin trading based on aforementioned guidelines. This provision is expected to help stockbrokers expand their business besides injecting greater liquidity in the stock market.
In the public issue front, Upper Tamakoshi Hydropower Limited (UTHL) has issued Initial Public Offering (IPO) worth Rs 1.06 billion for locals affected by the Hydropower Project in Dolakha district. The issue was assigned IPO Grade 4 by ICRA Nepal indicating below-average fundamentals. Likewise, Shivam Cement Limited (SHCL) has also issued IPO worth Rs 264 million for the locals of Makwanpur district. The issue was assigned IPO Grade 3+ by ICRA Nepal indicating average fundamentals. Besides, Aankhu Khola Hydropower Company Limited (AAKHU) and Union Hydropower Company Limited (UHCL) have also issued IPOs worth Rs 80 million and Rs 75million to the locals of Dhading and Lamjung/Kaski district respectively. AAKHU and UHCL both have been assigned IPO Grade 5 by ICRA Nepal indicating poor fundamentals.
Outlook
Despite substantial increment in bank capital, most listed BFIs were able to achieve attractive financial performance. Commercial banks profit surge by almost 20% in the FY 2017/18 as compared to FY 2016/17. With low Price-Earnings (PE) ratio of listed companies and announcement of yearly dividend around the corner, market is likely to attract fresh batch of investors.
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.
