Market sees high volatility

The Nepse index (-0.50%) witnessed a high level of volatility as book closures of right and bonus shares continue along with several IPOs in the pipeline. Moreover, SEBON approved the conversion of 19% promoter shares into ordinary shares. According to the SEBON chairman, the conversion process of promoter shares will be limited to ´not more than two percent a year´ to control the supply pressure in the market. [break]



The Commercial Banking sub-index (+0.15%) reversed its downtrend despite the book closure of Himalayan Bank (-Rs.1) on November 18 for 31.5% bonus shares and 12% cash dividend. The Hydropower sector (+0.34%) also defied the market trend through the appreciation of National Hydropower (+ Rs 5). The highlight in the Development Banking sector (-0.41%) was Sanima Vikas Bank´s (+R.65) declaration of 1:1.5 right share to raise its capital to upgrade to commercial bank. International Leasing and Finance (+Rs.20) and Goodwill Finance (+Rs.25) are closing their books on 24 November for 1:2.1 right shares and 12.63% cash dividend respectively which minimized the losses in the Finance sector (-0.005%). Prudential Insurance Company (Rs.0) declared 5% cash dividend yet the Insurance sector went down (-1.62%). The ´Others´ sub-index (-2.94%) made significant decline as Nepal Telecom (-Rs.15) shed value.



Among other highlights, Kist Bank (-Rs 6) proposed 1:1.5 right shares to increase its paid-up capital to Rs 5 billion. From the finance sector, Annapurna Finance (+Rs 5) and Nepal Housing and Merchant Finance (-Rs 10) are issuing 10% and 19% bonus shares respectively. Crystal Finance (700,000 units) and Arun Valley Hydro Power (1,715,000 units) were listed in the exchange. On the IPO side, Pathibhara Bikash Bank is issuing 245,000 units from 24 November, and Agricultural Development Bank will float Rs 960 million ordinary shares which is the largest IPO in Nepse´s history. Amongst book closures, DCBL Bank (+Rs 7) and Reliable Finance (-Rs 1) will close their books next week for 5% bonus shares and 20% bonus shares and 10% cash dividend respectively. Furthermore, SEBON announced new rules pertaining to rights share issuance: All companies will have to apply for SEBON´s approval for right share issuance within 4 months of the AGM approval date; companies also can no longer alter the declared amount of benefits once the application is submitted to SEBON. An in-flood of shares worth Rs 10 billion is imminent which will further aggravate the downtrend enunciated by technical analysis signals.

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