Market reform initiatives boost investor sentiment

Kathmandu, February 22

The country’s sole secondary market saw immense buying pressure in the trading week between February 16 and 20 on the back of investor optimism after the regulatory authority started implementing its earlier promises to promote the secondary market. Consequently, Nepal Stock Exchange index surged by 6.69 per cent or 89.98 points to a 22-month-high.

According to market analysts, investor sentiment has been boosted as the market has been bullish recently and the liquidity situation has also eased.

“However, it was the regulatory authority’s move of finally implementing its earlier promises that encouraged the share investors to scoop up shares,” explained Uttam Aryal, chairperson of Investors’ Association of Nepal.

A few days ago, Securities Board of Nepal (SEBON) amended four regulations — related to merchant bankers; securities brokers, traders and market makers; central depository service; and securities listing and trading.

With the amendments, the board has fixed the paid-up capital of stock dealers at Rs 200 million and also introduced a provision of merger and acquisition for brokerage firms. The board has also said that securities brokers will be able to provide margin trading facilities and securities traders could act as securities brokers. Moreover, with the use of modern technology on issuing IPO shares, maximum period for which securities are to be open has been reduced to 15 days from 30 days.

According to Aryal, while the board used to turn a deaf ear to all raised concerns, it has finally started facilitating share investors.

“However, a number of laws need to be changed and we hope the board will continue to support the market in the coming days.”

In a clear display of investor optimism, the weekly turnover surged by 67.06 per cent in the review week compared to the previous week to reach Rs 11.20 billion. In the previous week, the market had witnessed transactions worth Rs 6.71 billion. It is to be noted that the secondary market witnessed the highest single day transaction of Rs 2.79 billion on Thursday.

The trading volume also increased to 25.33 million stocks changing hands this week from 16.63 million in previous week.

The benchmark index had opened on Sunday at 1,344.59 points. It had surged by 19.39 points by the end of the first trading day and jumped by 34.26 points on Monday. After adding 1.77 points on Tuesday and 5.24 points on Wednesday, the market advanced by 29.32 points on Thursday to close the week at 1,434.57 points.

In the review week, all the sub-indices landed in the green zone.

The non-life insurance subgroup was the biggest gainer of the week, soaring by 14.66 per cent or 908.69 points to 7,108.98 points. It was due to share price of Himalayan General Insurance going up by Rs 57 to Rs 477 and Premier Insurance Co by Rs 103 to Rs 700.

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The microfinance sub-index gained 13.52 per cent or 318.09 points to 2,670.21 points due to share value of Chhimek Laghubitta Bikas Bank rising by Rs 177 to Rs 1,253.

Manufacturing subgroup jumped by 10.98 per cent or 287.30 points to 2,903.49 points, as share price of Bottlers Nepal (Tarai) ascended by Rs 1,899 to Rs 8,499. Similarly, life insurance sub-index went up by 10.95 per cent or 836.44 points to 8,473.64 points. Nepal Life Insurance Co’s share value rose by Rs 110 to Rs 1,240.

Trading subgroup climbed 6.53 per cent or 54.37 points to 886.49 points as share price of Salt Trading Corporation closed at Rs 2,747, up Rs 198. Banking saw a gain of 5.06 per cent or 57.94 points to 1,202.72 points.

It was due to share price of banks like Nabil up Rs 32 to Rs 755 and Himalayan by Rs 46 to Rs 574.

Moreover, hydropower sub-index rose by 4.24 per cent or 42.72 points to 1,049.93 points on the back of Chilime edging up eight rupees to Rs 430. Development banks subgroup ascended by 3.40 per cent or 61.95 points to 1,881.63 points, with share price of Jyoti Bikas Bank rising by four rupees to Rs 192.

The hotels sub-index went up by 2.27 per cent or 43.61 points to 1,961.17 points. Taragaon Regency gained by Rs 23 to Rs 334.

The others subgroup advanced by 2.09 per cent or 14.77 points. Likewise, mutual funds sub-index edged up by 1.80 per cent or 0.18 points to 10.26 points and finance subgroup inched up by 0.55 per cent or 3.75 points to 675.07 points.

In the review week, Shivam Cements was the leader in terms of trading volume and weekly turnover, with 1.044 million of its shares changing hands that amounted to Rs 653.04 million.

Himalayan Distillery with Rs 626.07 million, Nepal Life Insurance Co with Rs 413.10 million, Shikhar Insurance Co with Rs 397.97 million and NIC Asia Bank with Rs 352.66 million rounded up the top five companies with highest turnover in the week.

Meanwhile, Arun Kabeli Power with 706,000 shares, Prabhu Bank with 656,000 shares, NIC Asia Bank with 653,000 shares and Nepal Bank with 629,000 shares were the other companies to record high trading volume.

At the same time, Himalayan Distillery was the forerunner in terms of number of transactions with 3,605 transactions. It was followed by Shivam Cements with 3,557, Nepal Life Insurance Co with 2,549, NIC Asia Bank with 2,514 and NMB Bank with 2,252 transactions.