Market breakouts to a new low

The Nepal Stock Exchange (Nepse) index (-0.83 percent) witnessed a freefall for the first three consecutive trading days dipping below the 500 points, primarily due to an appalling performance from the commercial banks. Investor confidence took a severe battering as the index hit 479.73 points on Tuesday, the lowest level on the index since October 12, 2006. However, correction in the Banking sub-index later in the week helped recoup some of the losses and the market closed at 497.24 points.



Despite the rally in the last two trading days, Banking sub-index (-3.12 percent) ended the week in the negative terrain as key banks like Bank of Kathmandu (-Rs 35), Nabil Bank (-Rs 65) and Standard Chartered Bank (-Rs 170) shed values. Likewise, the Development Banking sector (-5.78 percent) posted the biggest loss amongst the sectors for the third consecutive week with Bageshwori Development Bank (-Rs 90) and Gurkha Development Bank (-Rs 94) depreciating along with Triveni Bikas Bank (-Rs 258) which readjusted its market price post book closure. [break]



Despite Samjhana Finance (+Rs 14) being one of the top gainers, the Finance sector (-1.12 percent) continued its downward trend with share price of Peoples Finance (-Rs 10) which announced 1:2 right shares and 10 percent bonus shares depreciating. Despite Chilime Hydro Power´s (+Rs 21) 45 percent cash dividend announcement, the Hydropower sector (-0.74 percent) landed in the red, dragged down by National Hydropower (-Rs 8). The Insurance sub-index (-0.01 percent) also descended due to the decrease in share value of Sagarmatha Insurance (-Rs 23). The ´Others´ sector (+2.72%) recorded the highest sector wise gain as Nepal Doorsanchar Company (+Rs 35) made an impressive climb.



Amongst other highlights, Central Depository System (CDS) system implementation process has begun with the Indian Embassy releasing Rs 19.2 million as the first instalment of assistance. The government announced that it will repay internal loans of up to Rs 5 billion within mid-March to help ease the liquidity crunch.



NIDC commenced banking service as a ´B´ class institution. Gurkha Finance proposed 1:1 right shares and Nepal Housing and Merchant Finance proposed 19 percent bonus shares in their respective AGMs. On the IPO front, Agricultural Development Bank´s issuance of ordinary shares worth Rs 960 million has been approved. Hama Merchant and Finance will be issuing 740,000 units of ordinary shares. Although the market observed a sign of relief during the last two trading days, the market turnover remains weak which implies the current reversal may not be sustainable.

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