--By Bikram Chitrakar

 

The secondary market of Nepal placed itself in greener terrain as investors welcomed a healthy quarterly report from listed companies. The benchmark Nepse index moved higher by 27.02 points or 5.04 per cent to rest at 536.38 while the highest index was reached on 31 July with 547.61 and lowest on 16 July with 509.36.

 

Healthy fourth-quarterly financial reports of many listed companies have stepped up capital market heat as share prices surged after positive reports in expectation of better returns. Interest rates from different financial institutions perfectly blend with investors’ confidence and growth in transaction.

 

Announcement of the budget on time and emphasis on monetary policies to increase the capital base of Banking and Financial Institutions within a year has further opened the way for mergers, right shares and bonus shares of many institutions. The insurance sector was boosted initially with the news of increasing capital requirements, as was the banking sector. 

 

Investors were keen to purchase stocks of select institutions that are likely to go for mergers. This has been noticed in the trading session, irrespective of the insititutions’ financial soundness. Total volume improved due to these. However, the volume gain was trimmed off with the news of promoters floating their shares to the public through the conversion process. 

 

Additionally, the market has picked up with a healthy performance of financial institutions, insurance and hydropower companies although a few stagnant periods for profit-booking were also there.  

 

Performance by Major Sectors

During the review period, it was seen that the insurance sector escalated by a lofty 235.47 points or 20.01 per cent to rest at 1177.03. Similarly, the hydropower sector went up by 141.45 points to close at 1203.45. Commercial banks added 18.77 points followed by 17.18 points up in development banks. Others sectors gained 11.75 points or 1.81 per cent to rest at 648.54 while the manufacturing sector inclined 10.11 points to 878.83. The hospitality sector, however, descended by 13.08 points or 2.02 per cent to settle 

at 646.23. 

 

Sensitive index measuring the performance of 120 blue chips scrip at the secondary market went uphill by 5.47 points or 4.11 per cent to 133.18 while, the float index calculated on the basis of real transaction ascended by 2.09 points or 5.55 per cent to 37.65. A total turnover of Rs. 3,246,999,238 was realised during the review period from 11,009,397 units of share trade via 38,657 transactions.

 

The accompanying figure shows the sector-wise distribution based on total volume of trade where the commercial banking sector dominated by covering 63.01 per cent of total trade. The insurance sector accounted for 15.66 per cent, the hydropower sector occupied 10.16 per cent and remaining sectors made up for the rest. 

 

Technically, the Simple Moving Average (SMA) is dominated by the Nepse index. However, the key resistance area near the level of 530 shows some tight level for new direction.

(Chitrakar is a Stock Analyst with Jamb Technologies Pvt Ltd.)