--By Bikram Chitrakar

 

The Nepali bourse stalled after reaching its highest in the last six years. This indicates the sentiment that was boosted after the second elections to Constituent Assembly and booming of insurance and hydropower sectors along with other positive factors have stalled for the time being. Nepal Stock Exchange Limited (Nepse), the benchmark index of the country's capital market, added 33.83 points or 4.13% to settle at 853.2 during the review period. While the highest of Nepse for the review period was 866.25 on May 7, 2014 and lowest was 808.86 on April 21, 2014.

 

On November 2, 2008 the benchmark Nepse index had rested at 853.16. But on May 7, 2014 it surpassed to a new level of 866.25. The sky rocketing increase in the prices of insurance and hydropower companies had contributed to this growth in the Nepse index.  

 

The index could not sustain longer on its newly gained height, rather got caught by a stagnant phase as well as minor corrections. Such corrections have opened opportunities in stock market especially in sectors like commercial banks that were comparatively out of focus of investors during the recent bull run. Acceleration in this sector was not hefty as investors preferred stocks of the other sectors. Hence, resurrection probabilities of these sectors are becoming higher. Besides, book closing for AGMs, declaration of dividends and price adjustments have also characterized the flat phase in the stock market. As investors pay attention to the clue of quarterly financial reports of the listed companies with optimism, still there is chance for new Bull Run in the market. The market capitalization for the review period stood at Rs 869.99 billion which is higher by 4.29 percent than the preceding period. Similarly, the total turnover has recorded a robust growth of 58.87 percent during the review period. Such positive momentum in market capitalization and turnover hints that the volume of stock market is going up. Nepse has moved forward for making further categories of listed stocks as sub-categories. Currently, there is only “A-Category” which is virtually referred as blue chip category. In a new move, Nepse has proposed to introduce “B”, “G” and “Z” categories through amendment of its listing bylaws. The proposed category “B” includes stocks with sound financial health but poor return, “G” includes newly listed stocks while “Z” category includes stocks with poor financial status and operation misbalance. It is believed that making further categories of listed stocks will definitely benefit the general investors for segregating and allocating their investment in selective and wise order. This in turn will be a positive move for development of overall capital market of the country.

 

 Performance by Sector

During the review period, among nine sectoral sub-indices six accelerated, two remained nearly stable and one plummeted down. Manufacturing sub-index topped the review chart with 186.29 point or 19.06 percent higher to close at 1163.82. Insurance sub-index climbed 16.80 percent followed by 12.84 percent up in hotel sub-index. Similarly, development bank sub-index gained 5.62 percent while finance sub-index added 4.29 percent for the review period. Commercial banks sub-index improved merely 14.42 points or 1.97 percent to rest at 746.18. On the other hand, trading and 'others' sub-indices remained mostly stable while hydropower sub-index faced a decline of 37.79 points to settle down at 2286. Sensitive index that tracks of “A" graded stocks droped 12.81 points or 6.60 percent to rest at 181.34 while float index gained 12.11 points or 26.28 percent to settle at 58.19. 

 

As suggested by the sector wise distribution of total volume of trade of the review period, commercial banks accounted for 37.09 percent share. Insurance sector occupied the second largest chunk i.e. 29.46 percent while hydropower and development bank sectors grabbed 14.33 percent and 10.31 percent respectively. Remaining portion was shared by the rest of the sectors.

 

 

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