Nepse in correction phase, down by 2.64pc

Kathmandu, June 8

After surging by almost 220 points since the first week of March, the country’s sole secondary market has gone into correction mode with the local bourse bearing losses in trading week between June 2 and 6.

Share market analysts have said that the market faced buying pressure previously that caused the unexpected hike in the index before the announcement of the federal budget of fiscal year 2019-20. “There needed to be some correction in the market after it rose by over 200 points in just three months,” said Prakash Rajhaure, an independent share market analyst. “The increment witnessed in the past few weeks was not actually a bullish trend in the share market but an unusual increment and the market has automatically gone into correction mode,” he added.

Meanwhile, the government has presented a supportive budget for the upcoming fiscal and clarified the government’s perspective. “However, banks and financial institutions are still hesitant to disburse sufficient amount of funds for share trading and the government needs to look into this issue,” Rajhaure mentioned.

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As a result, the Nepal Stock Exchange (Nepse) index was in a downward trend in the review week, dropping by 2.64 per cent or 34.88 points.

The sensitive index shrunk by 2.58 per cent or 7.26 points to 273.89 points and float index also fell by 2.65 per cent or 2.56 points to 94.06 points.

In the review period, weekly turnover decreased by 36.37 per cent as compared to the previous week to Rs 2.76 billion. In the previous week, the market witnessed turnover of Rs 4.33 billion. Likewise, daily average turnover went down to Rs 689.07 million, which was a decline of 20.46 per cent in comparison to previous week when it stood at Rs 866.32 million.

In the review week, trading of shares of mutual funds plummeted by 59.24 per cent as compared to the previous week to Rs 3.55 million. In the previous week, mutual funds witnessed turnover of Rs 8.71 million. However, the trading of promoter shares rose by 8.48 per cent to Rs 139.7 million, against Rs 71.9 million in the previous week.

The secondary market had opened at 1,319.47 points on Sunday and dropped by 13.79 points by the end of the trading day. On Monday, it again descended by 12.84 points and by 3.56 points in the next trading day. On Thursday too the market dropped by 4.69 points to close the week at 1,284.59 points. The market remained closed on Wednesday due to a public holiday to celebrate the Muslim festival of Eid.

In the review week, only finance and hotels landed in the green zone. The finance sub-index increased by 1.78 per cent or 11.17 points to 637.12 points. Likewise, the hotels subgroup rose by 1.2 per cent or 25.27 points to 2,130.63 points.

Meanwhile, hydropower subgroup was the biggest loser of the week, plunging by 4.16 per cent or 53.06 points to 1,221.91 points due to the share price of Chilime dipping by Rs 10 to Rs 522 and Upper Tamakoshi by Rs 18 to Rs 275.

Trading sub-index also descended by 4.04 per cent or 10.31 points to rest at 244.51 points. Share price of Bishal Bazar went down by Rs 91 to Rs 1,506.

Likewise, life insurance subgroup fell by 3.45 per cent or 225.29 points to 6,304.38 points, with Nepal Life going down by Rs 15 to Rs 920, among others.

The microfinance sub-index also dropped by 3.18 per cent or 48.05 points to 1,459.04 points and non-life insurance went down by 3.04 per cent or 176.81 points to 5,637.02 points, with the share price of Everest Insurance dipping by eight rupees to Rs 408.

Similarly, banking subgroup fell by 2.83 per cent or 33.32 points to 1,143.34 points, with share price of Standard Chartered dropping by Rs 30 to Rs 673 and that of Nabil by Rs 19 to Rs 828.

The others sub-index descended by 2.62 per cent or 19.89 points to 739.55 points. Similarly, manufacturing subgroup dropped by 0.63 per cent or 17.65 points to 2,763.93 points and development banks sub-index inched down by 0.55 per cent or 8.91 points to 1,598.84 points.

In the review week, Shivam Cements was the leader in terms of weekly turnover with Rs 353.5 million, followed by Prabhu Bank with Rs 219.55 million and Premier Insurance with Rs 185.21 million.

In terms of weekly trading volume, Prabhu Bank took the lead with 802,000 of its shares changing hands, followed by Shivam Cements with 527,000 shares and Nepal Bank with 501,000 shares.

Meanwhile, Shivam Cements topped in terms of number of transactions with 2,797 deals. It was followed by Panchthar Power Company with 2,043 and Premier Insurance with 1,960 transactions.