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May 2015 Stock Taking

Published on: 2015-05-27 00:00:00     1046 times read    0  Comments
Most of the stocks turned red during the review period (Feb 18 - March 19) pushing the index to nearly two months low. The Nepse index closed in red losing 15.03 points or 1.53% to settle at 967.62. The index touched highest level on 9 March with 988.77 and the lowest was 959.14 on 16 March. 
 
--By Bikram Chitrakar
 
The secondary market of Nepal declined ahead of 3rd quarter reports from companies as price adjustments and series of IPOs and right shares pulled out funds. The benchmark Nepse index lost 11.47 points, or 1.20%, to rest at 945.12 while the session’s high was on 23 March with 956.59 and low was on 5 April with 934.25. 
 
In the four months since mid-January this year, 9 scrips (Api Power Company, Rapti Bheri Bikas Bank, Laxmi Value Fund I, Upper Tamakoshi Hydropower, Barun Hydropower, Janautthan Samudayic Laghubitta, Mirmire Microfinance, ILEFCO Microfinance and Vijaya Laghubitta Sanstha) debuted in the market through initial public offering of Rs. 4.2 billion which were oversubscribed several times.  As a result, the total turnover of shares in the secondary market reduced 33% in the same period. 
 
While this shift of funds to IPO market was one big reason for the decline in the secondary market, it was also the season of price adjustment following the rush of annual general meetings and subsequent distribution of dividend is now almost over. Meanwhile, companies have listed the bonus and right shares, putting further downward pressure on stock prices. Now, investors are cautious though optimistic about the 3rd quarter reports that have already started coming in.
 
 
Performance by Sector
‘Others’ sector booked the heaviest loss of 7.21% in the review month, followed by Insurance sector (5.21%), Hotels sector (1.87%), finance companies sector (1.48%) and development banks (1.11%). However, trading sector added 5.23% and manufacturing sector gained 1.51% while the banking sector accelerated 0.84%.  Sensitive index that shows the performance of blue chip companies of Nepal plunged 1.26 points, or 0.62%, to 202.39 while the float index lost 0.48 points, or 0.71%, to rest at 66.7.
 
The accompanying figure illustrates the sectoral distribution based on total volume of trade for the review period. Majority of the volume is dominated by commercial bank and insurance sector. Commercial bank acquired 48.63% of trade while insurance sector occupied 23.38%. Besides, development bank and hydropower shared 14.16% and 8.05% respectively and remaining sectors covered the rest.
 
Referring to the Simple Moving Average (SMA), Nepse index has already dominated by 200 days SMA and 30 days SMA indicating the fall for upcoming session and the straight downward face of the trend lines confirms the declining trend. As suggested by pivotal analysis, Nepse finds support level at 934.17 and 923.21 while index is likely to hover in the range of 950.82 to 939.82.   
 
Chitrakar is a freelance Stock Analyst.

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