KATHMANDU, Nov 11: Nepal Stock Exchange (Nepse) benchmark index plunged 35.73 points this week to close at 1,460.73 points on Thursday -- the last trading day of the week. The stocks were in a freefall right from the beginning of the week.
Compared to previous elections when stocks used to rise, the stock market has taken a bearish trend even when the country is headed for parliamentary and provincial polls.
Analysts say that the alliance between two major communist parties has frightened stock investors.
CPN-UML and CPN (Maoist Center) have jumped into the election fray by forging electoral alliance.
Another reason for the fall of stock prices was the increase in the supply of shares in the market with huge stock dividend and rights issue of listed companies, particularly bank and financial institutions, at a time when the stock market was falling.
“The decision of the two communist parties to forge electoral alliance and eventually unite the parties has worried investors,” said Sameer Maharjan, an investor. “Besides, oversupply of shares at a time when the interest rates are still at such high level has sent stocks down,” he added.
First quarter financial results of bank and financial institutions (BFIs) also did not buoy investors.
Profit growth of many banks has squeezed in the first quarter amid rising interest expenses due to high interest rates they offered last year while they were facing acute shortage of lendable fund.
A total of 6.05 million units of shares of 179 companies worth Rs 2.53 billion were traded in the market this week through 29,013 transactions. The turnover was 12.47 percent higher than the last week's total transaction amount.
Except manufacturing and processing group, all groups ended in the red zone this week. Insurance group plunged the highest by 261.16 points to finish at 7,974.51 points. Hotel group also ended 126.56 points lower at 2,175.02 points. Sub-indices of development bank and hydropower groups fell 51.72 points and 22.23 points, respectively, to close at 1,742.64 points and 1,781.05 points.
Banking, the heavyweight group, registered a loss of 30.76 points to settle at 1,246.26 points.
Finance group and trading groups fell 13.83 points and 7.18 points, respectively, closing at 754.79 points and 222.13 points. 'Others' group also went down 7.81 points to close at 809.79 points. Manufacturing and processing group, however, went up 2.45 points to end at 2,399.33 points.
Standard Chartered Bank Nepal Ltd led the group of companies in terms of turnover (Rs 115.6 million) while Prabhu Bank Ltd topped the list in terms of number of shares traded (177,000 units). Nepal Grameen Bikas Bank Ltd (NGBBL) was the top companies in terms of number of transactions (2,795).
Rights shares of Reliable Microfinance Bittiya Sanstha Ltd, Everest Bank Ltd, Hamro Bikas Bank Ltd, and Century Commercial Bank Ltd were listed in Nepse for trading. Similarly, bonus shares of Mission Development Bank Ltd were also listed in the stock exchange company for trading.