The market took bearish trend in the first week of trading since the devastating earthquake of April 25. The stock market opened for trading only on Sunday after a hiatus of nearly a month due to damages in the building of Nepse's subsidiary company Central Depository System and Clearing Ltd (CDSCL) by the earthquake.Stock analysts say market slide in the aftermath of such a big tragedy was expected. "The tragedy of this scale makes psychological impact on investors. The panic and fear among investors trigger massive sell-off which leads to drop in the benchmark index in post-disaster period," Guna Nidhi Bhusal, proprietor of Aryatara Investment and Securities Pvt Ltd, said. "The exact economic impact or loss from the earthquake has not been ascertained yet. The psychological impact of the quake on investors is the main culprit so far. Insurance and Banking groups are likely to face impact as the companies under these groups are likely to be hit mostly by the quake."
While the market was on a freefall in the first four trading days, it recovered 4.13 points in the last trading day. "There were no buyers in the first trading day. However, few buyers showed up in the remaining four trading days. Yet, there was massive selling pressure. This led to the rapid fall," Bhusal explained.
There were no buyers for shares of non-life insurance companies. Analysts say non-life insurance companies will suffer the most as they will have to pay huge amount to settle claims for damages in homes and other structures. They also underlined the need for favorable policy for the companies affected by the quake to minimize the impact on stock market.
"Banks and financial institutions dominate the market. Investors fear that the impact of the quake might be seen in their balance sheets as the closing of the fiscal year is drawing closer. The insurance companies, particularly non-life, are going to be hit. The macroeconomic fundamentals are also going to be affected by the quake," Priya Raj Regmi, president of Stock Brokers Association of Nepal (SBAN), told Republica. "This all will make impact on the stock market. The future movement of the benchmark index and investors' psychology largely depends on the government's policy."
Hydropower group was the biggest loser of the week as its sub-index nosedived by 190.8 points to close at 1,829.77 points. Insurance and Banking groups followed suit with their sub-indices going down by 148.8 points and 95.02 points, respectively, to close the week at 3,493.31 and 713.86 points. Development Banks also shed 36.39 points to close the week at 749.98 points. The sub-indices of Manufacturing and Processing, and Finance groups also went down by 19 points and 8.32 points, to close at 1,474.11 points and 749.98 points, respectively.
'Others' and Trading groups managed to buck the trend, as their sub-indices gained 22.32 points and 1.22 points, respectively, to close at 675.54 points and 207.96 points. Hotels group remained unchanged at 1,943.62 points.
A total of 1.91 million units of shares of 111 companies worth Rs 745.73 million were traded in the market through 5,147 transactions this week.
Nepal Life Insurance Company topped the list of the companies in terms of turnover (Rs 88.87 million), while Prabhu Bank Promoter remained at the top in terms of number of traded shares traded (443,000 units). Chilime Hydropower Company Ltd remained at the top in terms of number of transactions (370).
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