KATHMANDU, SEPTEMBER 10

The Nepal Stock Exchange (Nepse) index fell by 1.16 per cent or 32.88 points week-on-week in the trading between September 4 and 8 to retreat below the 1,940-point threshold. The last time the benchmark index was at this level was on July 12.

Despite the plunge in the secondary market, stakeholders expect positive changes as the Council of Ministers recently green-lighted provisions for additional stock brokers and a new stock exchange.

Chhote Lal Rauniyar, former president of Nepal Investors Forum, praised the initiative of the Securities Board of Nepal (SEBON) and its Chairperson Ramesh Hamal for introducing provisions recently approved by the Cabinet for the development of the secondary market.

'Comparing the quality of service is difficult when there is no competition in the market. With the way now paved for a second stock exchange, stakeholders will be introduced to newer digital mode of services for lower rate of commission as well as help remove the monopoly of the existing stock exchange. This will allow unsatisfied companies registered under the old Nepse to withdraw and join the new stock exchange as well as provide new companies issuing their initial public offering (IPO) with the option to choose,' Rauniyar said.

He further stressed on the need to develop the existing stock exchange alongside the new one, adding that the existing local bourse should also be upgraded in a digitised and systematic manner in order to continue providing quality service.

He also shared that the Cabinet's approval to issue three levels of brokerage licence to eligible people and companies is a standard decision followed around the world, which will assist in making the market independent and removing the existing monopoly of 50 brokers, previously set by the government.

'The new provisions approved are fully in favour of the investors who procure shares in exchange for their capital. The provision will allow new brokers who have met the required criteria as well as new investors from across the country to enter the market,' he added.

Furthermore, Rauniyar called upon the need to reduce the commissions set for Nepse, SEBON, CDS, and brokers. He also emphasised that introduction of bad policies by market regulators and authorities concerned caused liquidity crunch in the banks resulting in the increase of interest rates for loans, affecting businesses and industries and the share market as well.

'However, with the increase in labour wages in many other countries, remittances entering the country have spiked significantly in recent years bringing ease to the existing liquidity crunch, but the high rate of interests and the lack of fundamental investors are to be blamed for the plunge in the capital market and restricting its growth,' he added.

The sensitive index, which measures performance of class 'A' stocks, fell by 1.66 per cent or 6.36 points to 376.84 points. Similarly, the float index that gauges performances of shares actually traded also witnessed a decrease of 1.69 per cent or 2.30 points to 133.99 points.

Altogether 14.87 million shares were traded during the review week through 113,758 transactions that amounted to Rs 5.04 billion. The weekly turnover also slumped by 30 per cent compared to preceding week when 21.25 million shares had changed hands through 162,936 transactions that totalled Rs 7.55 billion.

The average daily turnover also fell by 19.89 per cent during the review period. The average daily turnover in the past week was Rs 1.25 billion and it dropped just over one billion rupees this week.

It has to be noted that the local bourse had remained open for normal six days in the preceding week against only five days during the review period.

The benchmark index opened at 1,970.62 points on Sunday and increased by 6.68 points to close at 1,977.30 points for the day.

Nepse index was southbound for the rest of the trading week. The benchmark index slipped by 4.29 points on the second day of the trading week before decreasing further by 21.17 points to close at 1,951.84 on Tuesday.

On Wednesday, the Nepse index fell again by 11.96 points to 1,939.88 points. The benchmark index on Thursday shed 2.14 points to close at 1,937.74 points for the week. The market remained closed on Friday due to the celebration of Indra Jatra.

Indices of all 13 subgroups landed in the red this week. The banking, manufacturing and processing, and mutual funds saw a decrease of 1.22 per cent, 0.96 per cent and 0.98 per cent, respectively.

Meanwhile, hotels and tourism fell by 1.10 per cent, others by 4.96 per cent, hydropower by 1.76 per cent, trading by 4.97 per cent, non-life insurance by 0.47 per cent, finance by 1.44 per cent, development banks by 0.59 per cent, microfinance by 1.39 per cent, life insurance by 1.11 per cent, and investment by 2.91 per cent.

A version of this article appears in the print on September 11, 2022 of The Himalayan Times.