Nepal | January 18, 2020

Share market movement reflects investor immaturity: Analyst

Himalayan News Service

Kathmandu, November 30

Pessimistic investor sentiment shaved off 0.7 per cent or 7.81 points from the country’s sole secondary market in the trading week between November 24 and 28.

At a time when policy ambiguity has largely been blamed for the Nepal Stock Exchange (Nepse) going on a tailspin, an analyst seeking anonymity opined that the current market movement is actually simply a reflection of lack of maturity among investors.

“Going by the theory that share market mirrors the economy, there is no logic behind the bearish run at Nepse because our economic indicators are actually quite encouraging at the moment,” the analyst pointed out, adding that the current trend seems to be caused by rookie investors who are yet to grasp the basics of investing in the share market and large investors causing panic for their own benefits.

According to the analyst, most share investors in Nepal suffer from what is termed as a ‘herd mentality’, meaning they tend to mindlessly follow the crowd. “Very few share investors actually do proper research and market analysis, thus a majority of them are susceptible to rumours. And this is what is happening in Nepal’s share market nowadays.”

Hence, the sensitive index, which measures performance of class ‘A’ stocks, skidded by 0.09 per cent or 0.23 point to 246.66 points. The float index that gauges the performance of shares actually traded also dipped by 0.58 per cent or 0.49 point to 82.78 points.

In the review week, the secondary market recorded a weekly turnover of Rs 1.32 billion with 5.15 million shares of 181 companies changing hands through 22,174 transactions.

The traded amount was 16.01 per cent less compared to the preceding week when 26,143 transactions of 5.52 million shares of 184 firms that amounted to Rs 1.57 billion had been undertaken.

The benchmark index, which was at 1,120.60 points when the market opened for trading on Sunday, had dropped by 10.52 points by the time of closing. On Monday, Nepse index inched down by 0.001 point and shed another 0.91 point on Tuesday.

While the local bourse reversed course and gained 8.30 points on Wednesday, it fell again by 4.67 points on Thursday to close the week at 1,112.79 points.

Others and microfinance were the only two subgroups to record gains in the review week.

Adding to the previous week’s 0.27 per cent rise, others subgroup advanced by 0.63 per cent or 4.02 points to 640.18 points. This was primarily due to Nepal Telecom jumping by 1.44 per cent to Rs 633.

Microfinance, meanwhile, managed to recoup some of the 1.28 per cent loss of preceding week by climbing 0.49 per cent or 7.17 points to 1,480.84 points.

The trading subgroup, after surging by 42.61 per cent in the previous week, witnessed the biggest plunge of 13.68 per cent or 71.29 points to 449.89 points.

It was weighed down by Salt Trading Corp’s share price slumping by 17.41 per cent to Rs 1,252 and of Bishal Bazaar Co down 1.34 per cent to Rs 1,400.

Non-life insurance fell by 2.25 per cent or 91.29 points to 3,970.30 points.

After taking a dive of 7.80 per cent in the past week, manufacturing managed to limit its drop to 1.78 per cent or 40.24 points to 2,219.52 points this time.

The loss of the remaining subgroups was below one per cent. Banking slipped by 0.97 per cent or 9.98 points to 1,021.21 points; mutual funds fell by 0.76 per cent or 0.07 point to 9.11 points; finance was down 0.51 per cent or 2.85 points to 554.30 points; and hotels shed 0.51 per cent or 8.97 points to 1,746.91 points.

Development banks dipped by 0.38 per cent or 5.79 points to 1,529.82 points; hydropower shaved off 0.30 per cent or 2.79 points to land at 911.44 points; and life insurance sub-index rested at 4,952.84 points, down 0.05 per cent or 2.40 points.

NMB Bank was the forerunner in terms of number of transactions and turnover — recording a total of 1,137 transactions worth Rs 98.59 million.

Nepal Investment Bank (Promoter Share) with Rs 97.90 million, Nepal Bank with Rs 85.34 million, Himalayan Distillery with Rs 63.79 million and Nabil Bank with Rs 48.02 million rounded up the top five firms with highest weekly turnover.

Nepal Bank secured the top spot in category of trading volume with 271,000 of its shares changing hands. It was followed by NMB Bank with 258,000, Prabhu Bank with 130,000, Civil Bank with 115,000 and NCC Bank with 114,000 shares.

Meanwhile, Rasuwagadhi Hydropower with 1,127 deals, Sanjen Jalavidhyut with 1,020, Upper Tamakoshi Hydropower with 589 and Ghodighoda Laghubitta Bittiya Sanstha with 583 were other top firms with highest number of transactions.


A version of this article appears in print on December 01, 2019 of The Himalayan Times.


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