KATHMANDU, SEPTEMBER 24
The Nepal Stock Exchange (Nepse) index fell by 3.74 per cent or 71.42 points over the trading week between September 18 and 22 to retreat below the 1,840-point threshold.
The market regulator also decided to close the secondary market on Friday from this week, following backlashes from investors and stakeholders. The market will now remain open for five days a week.
Chhote Lal Rauniyar, former president of Nepal Investors Forum, said that five trading days are more than enough as the market, brokers and investors need some time to wrap up the weekly investment and trades. "The market remaining open for just two hours on Friday was not profitable in any way. Investors had been protesting the government's decision to keep the market open even on Friday, as stock markets are open for only five days in a week according to international practices," he shared.
Rauniyar said that the increase in interest rates and low market sentiment among investors has weighed on the market movement. "The increase in bank rates after the scrapping of the gentlemen's agreement by the Nepal Bankers' Association and the low market sentiment among investors can be attributed to the continuous fall of the benchmark index. The increase in interest rates has not only affected the share market but also the industrial sector. The impacts have been felt on a macro level. The Confederation of Nepalese Industries (CNI) and Federation of Nepalese Chamber of Commerce and Industries have also complained about the increasing interest rates," Rauniyar said. "The hike in interest rates is a slow poison for the country's economy."
He also said that the increase in interest rates will affect the banks as well as the central bank if people default on their loans, increasing their non-performing assets (NPAs).
Although the market has been in a bearish trend, investors are hopeful for its recovery in a few months with the recent implementation of policies and programmes for the sector's improvement.
"Despite the market falling below the 1,900-point threshold at present, we may see the market rising again in a few months time due to the recent implementation of quotas for eligible foreign workers, introduction of non-residential Nepalis in the market and the increasing flow of remittance," Rauniyar shared.
The sensitive index, which measures the performance of class 'A' stocks, fell by 3.35 per cent or 12.47 points to 359.43 points. Similarly, the float index that gauges performances of shares actually traded also witnessed a decrease of 3.73 per cent or 4.95 points to 127.77 points.
A total of 15.22 million shares were traded during the review week through 95,768 transactions that amounted to Rs 4.20 billion. The weekly turnover also decreased by 39 per cent compared to the preceding week when 22.76 million shares had changed hands through 146,293 transactions that totalled Rs 6.98 billion.
The average daily turnover fell by 9.67 per cent during the review period. The average daily turnover in the past week was Rs 1.16 billion and it dropped to Rs 1.05 billion this week.
The secondary market has opened at 1,910.38 points on Sunday and fell by 33.97 points to close at 1,876.41 points. The market remained closed on Monday this week due to the public holiday for Constitution Day.
The benchmark index fell by 38.81 points on Tuesday before making a slight recovery of 11.20 points to close at 1,848 points on Wednesday. However, the optimism could not sustain and the Nepse index fell again by 9.84 points on Thursday to rest at 1,838.96 points for the week.
Indices of all 13 subgroups landed in the red this week. The banking, manufacturing and processing, and mutual funds saw a decrease of 1.98 per cent, 3.06 per cent and 3.77 per cent, respectively. Meanwhile, hotels and tourism fell by 1.92 per cent, others by 4.22 per cent, hydropower by 6.73 per cent, trading by 5.11 per cent, non-life insurance by 3.61 per cent, finance by 6.45 per cent, development banks by 5.27 per cent, microfinance by 4.58 per cent, life insurance by 4.23 per cent, and investment by 4.91 per cent.
A version of this article appears in the print on September 25, 2022 of The Himalayan Times.
