Market declines on political woes

The Nepal Stock Exchange (Nepse) Index (-1.75 percent), which became unable to sustain the previous week´s impressive gain, declined marginally as key sectors posted losses. The market shed 8.39 points with the benchmark index closing at 469.34 points on Thursday.



Though the market reacted positively around mid-week on the grounds of a favorable political outcome, it could not sustain further as the ongoing political deadlock could not substantiate a resolution. Furthermore, the total turnover went down by 4.58 percent for the second consecutive week, indicating no signs of recovery in investors´ confidence. [break]



The Hydropower sub-sector (-8.96 percent) posted the highest loss amongst all the sub sectors as Chilime Hydropower Company (-Rs 110) and Butwal Power Company (-Rs 102) shed value, correcting from its previous week´s speculative gain.



Despite the share price of Machhapuchhre Bank (+Rs.27) topping the gainers´ list, the Commercial Banking sector (-2.99 percent) plunged as share prices of key banks like Citizens Bank International (-Rs 191) post book closure price, Nepal Credit & Commerce Bank (-Rs 35) and, Nepal Bangladesh Bank (-Rs 29) depreciated.



Nevertheless, the remaining sub-sectors ended in the green. The Insurance sector (+0.72 percent) surged as Life Insurance Company (Nepal) (+Rs 21) and Asian Life Insurance Company (+Rs 8) gained share value. Similarly, the ´Others´ sub-sector (+0.43 percent) also posted marginal gain as share price of Nepal Telecom (+Rs 8) went up.



The Finance sector (+0.32 percent) landed in the gainers´ side after weeks of consecutive losses as NIDC Capital Markets (+Rs 29) and Narayani National Finance (+Rs 13) appreciated.



Infrastructure Development Bank (-Rs.30), which is closing its books on July 30 to issue 1:1.5 right shares, ended in the top losers´ list. However, the Development Banking sector (+0.05 percent) booked a minimal gain as the share prices of Birat Laxmi Development Bank (+Rs 21) and Miteri Development Bank (+Rs 27) climbed.



Amongst other highlights, NRB´s old unified directive (2066) has been replaced by the new unified directive (2067) from July 17. Some of the highlights of the directives are as follows: “C” class financial institutions need to have a paid-up capital of Rs 200 million to open up new branches.



Similarly, an individual cannot be a promoter of a licensed financial institution under NRB and a co-operative institution licensed under the Co-operative Act (2048) at the same time.



In other news, the process for adding new brokers is expected to resume from next week as Nepse has gotten a go ahead from Securities Board of Nepal (SEBON).



On the IPO side, Kaski Development Bank´s IPO will begin on July 29, and SEBON has granted permission to Tenau Bikas Bank to issue public shares.



Forecast



Technical analysis indicates that other than routine fluctuations no significant changes can be expected.

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