KATHMANDU, JULY 15
The country's sole secondary market ended a volatile fiscal year 2021-22 on a positive note today with the Nepal Stock Exchange (Nepse) index advancing by 7.93 points compared to yesterday's close to rest at 2,009.46 points.
Share investors were in buoyant mood at the start of the fiscal, with the benchmark index that had opened at 2,883.38 points on July 18 scaling to an all-time high of 3,198.60 points on August 18. The optimism, however, could not sustain and the market plunged to its lowest in the review year to 1,848.28 points on June 23. Despite some recovery in the recent days, the benchmark index ended the fiscal year 37.20 per cent or 1,189.14 points lower than the all-time high. Year-on-year, the Nepse index recorded a loss of 30.31 per cent or 873.92 points.
According to market analysts, the investor sentiment was dampened due to the central bank's Monetary Policy for the fiscal year 2021-22 that was not favourable towards the share market. The Monetary Policy had capped the limit of margin loans where a person is able to take loan up to only Rs 40 million by using shares as collateral from one BFI and borrow up to Rs 120 million from multiple BFIs to buy shares.
According to Chhote Lal Rauniyar, the immediate past president of Nepal Investors Forum, the new prompted investors to sell their shares to be able to comply with the new rules regarding margin loans.
Moreover, he blamed the NRB for implementing the rule of credit-deposit (CD) ratio through the Monetary Policy by replacing the provision of credit to core-capital plus deposit (CCD) ratio, which he said also impacted the market and caused liquidity crunch in the BFIs. "Due to the CD ratio policy, Rs 500 billion has been frozen in the banks," he said. "Moreover the amended Unified Directive for BFIs also stated that lending against shares would attract a risk weight of 150 per cent, which further weighed on the share market."
The total market capitalisation today stood at Rs 2.87 trillion, which was 28.43 per cent lower compared to Rs 4.01 trillion during the closing of the previous fiscal year.
Likewise, the sensitive index, which measures the performance of class 'A' stocks, decreased by 28.71 per cent or 155.40 points over the review period to rest at 385.91 points today. The float index that gauges the performance of shares actually traded fell by 30.43 per cent or 60.97 points year-on-year to settle at 139.37 points for the fiscal 2021-22.
All the subgroups landed in the red, with trading recording the highest loss of 45.60 per cent or 1,698.25 points to 2,025.56 points. It was trailed by life insurance and non-life insurance subgroups, that plunged 43.07 per cent or 7,329.34 points to 9,688.19 points, and 43.02 per cent or 6,029.79 points to 7,986.32 points, respectively.
Investment subgroup plummeted by 39.32 per cent or 41.78 points to 64.48 points; finance by 36.58 per cent or 915.20 points to 1,586.93 points; and others by 31.28 per cent or 666.55 points to 1,464.03 points.
Banking, the subgroup with the highest market capitalisation, dropped 30.59 per cent or 600.87 points to 1,363.39 points. Hotels and tourism descended by 25.68 per cent or 912.41 points to 2,640.60 points, with development banks on its heels with a drop of 24.13 per cent or 1,114.18 points to 3,502.59 points.
Hydropower lost 18.98 per cent or 548.90 points to 2,343.65 points; manufacturing and processing was down 16.37 per cent or 996.56 points to 5,091.08 points; and microfinance rested at 4,451.79 points, down 16.36 per cent or 870.81 points. Mutual funds managed to limit its loss at 4.70 per cent or 0.74 points to close at 15.01 points for the fiscal 2021-22.
A version of this article appears in the print on July 16, 2022, of The Himalayan Times.
