Nepse stumbles again

The Nepal Stock Exchange (Nepse) index (-2.43 percent), which has consistently remained in the negative terrain in 2010, showed no signs of respite this week. The benchmark index closed at 485.14 points. Despite encouraging 2nd quarter results trickling in, the secondary market was unable to revive.



Despite Kist Bank (+Rs 23) being one of the top gainers, the Commercial banking sub-index (-1.57 percent) landed in the red zone as key banks like Standard Chartered Bank (-Rs 10), Nabil Bank (-Rs 120), and Siddhartha Bank (-Rs 51) shed values. [break]



In spite of Malika Bikas Bank´s (-Rs 63) dismal performance, the Development Banking sector (+0.85 percent) defied the market trend as Gurkha Development Bank (+Rs 59) and Bageshwori Development Bank (-Rs 60) topped the gainers´ chart.



However, the Finance sector (-2.44 percent) continued its downtrend with decreases in share prices of Lord Buddha Finance (-Rs 37) and Imperial Finance, which announced 3:1 right shares and 20 percent bonus shares respectively. Likewise, the Hydropower sector (-0.85 percent) declined because of National Hydro Power (-Rs 15), which also witnessed bulk trading.



Similarly, the Others sector (-6.97 percent) posted the biggest loss amongst the sub-indices as Nepal Doorsanchar Company (-Rs 34), which was the highest gainer the previous week, lost major share value. However, the Insurance sector (+0.15 percent) made marginal gains with share price of Sagarmatha Insurance (+Rs 11) appreciating.



Amongst other highlights, news surfaced that commercial banks have not utilized financing facilities provided by the Nepal Rastra Bank (NRB) at lower interest rates to overcome the liquidity crisis. Also, NRB has directed commercial banks to increase their capital adequacy ratio, if their liquid asset falls below 20 percent of the total deposits.



Investors responded to the current market situation by proposing new measures to improve the efficiency of the market and staging a protest program at Nepse.



On the IPO front, Nerude Laghubitta Bikash Bank allotted its IPO while Prime Life got permission from Securities Board of Nepal to float ordinary shares. Manakamana Bank is issuing 3,000,000 units of ordinary shares from February 25.



With investors protesting against Nepse, the already sliding market with weak volume (-32.92 percent) can be anticipated to descend further which is corroborated by the downtrend patterns shown by technical analysis.

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