KATHMANDU, May 27: The Nepal Stock Exchange (Nepse) index fell sharply following Nepal Rastra Bank (NRB)’s restriction in short term trading by BFIs and investment in microfinance institutions. The market plunged in the morning with the benchmark giving up more than 50 points within first 5 minutes of trading. However, bulls gained control as the market made a quick recovery before settling around 30 point slower at mid-day. Further, stocks continued to climb in the latter part of the session as Nepse closed the day mildly lower at 2,815.40 – down 1.20 points against the session earlier. 

The central bank issued a circular on Tuesday with amendments in Unified Directives, 2077 aimed at curbing speculative trading by Class ‘A’, ‘B’ and ‘C’ financial institutions. Discouraging short term trading of equities and restraining investments in micro sector lenders by BFIs were the main revisions among others. The decision comes after few financial institutions were said to have involved in speculative trading instead of focusing on their core business. Consequently, the stock market reacted with a 50-point dip in the morning, but the circular’s effect was negated by heavy buying volumes in many of the sectors causing the market to close essentially flat on Thursday. Daily turnover crossed Rs. 14 billion mark for the first time in the exchange’s history. 

Trading segment turned in the best performance of the day as the group’s sub-index shot up by 6.72%. Hydropower, Development Bank and Finance sub-indices, subsequently, rose 4.57%, 3.43% and 2.28%. Non-Life Insurance, Manufacturing & Processing and Mutual Fund sub-indices also climbed into positive territory. Offsetting the gains were microfinance stocks which fell 3.41% on average. ‘Others’, Life Insurance, Hotels & Tourism and Investment indices also inched lower. Heavyweight banks also dipped marginally.

Shares of Api Power Company Ltd were traded the most registering a turnover of over RS. 432 million. Arun Kabeli Power Ltd, Chilime Hydropower Company Ltd and United Modi Hydropower Ltd were among other heavily traded stocks with turnovers of Rs. 377 million, Rs. 370 million and Rs. 350 million. Besides, Nepal Reinsurance Company Ltd, Sanima Mai Hydropower Ltd and National Hydropower Company Ltd were the other actives. 

19 energy scrips remained locked in the upper circuit limit of positive 10%. Khanikhola Hydropower Co. Ltd, United Modi Hydropower Ltd, Nepal Hydro Developers Ltd shot up by exactly 10% while other scrips rallied more than 9%. Other hydropower stocks followed suit posting notable moves to the upside.

On the other hand, microfinance stocks tumbled as NRB’s restrictions weighed on the sector. Samata Gharelu Laghubitta Bittiya Sanstha Ltd sank 5.23%, while Mero Microfinance Bittiya Sanstha Ltd slipped 5.06%. NMB Microfinance Bittiya Sanstha Ltd and NIC Asia Laghubitta Bittiya Sanstha Ltd registered declines of 4.84% each. Nerude Laghubitta Bittiya Sanstha Ltd, Suryodaya Laghubitta Bittiya Sanstha Ltd, Civil Laghubitta Bittiya Sanstha Ltd and Aarambha Chautari Laghubitta Bittiya Sanstha Ltd also came under notable pressure with each scrip losing more than 4% on the respective prices. 

Following a minor dip in the session earlier the equity market formed a bullish candlestick as Nepse recouped early losses closing firmly higher than the opening level. Nonetheless, compared to the prior close the index ended marginally lower. With volumes making fresh highs, the index has found some ground above 2,800 mark with buying volumes absorbing corrections in different sectors. A consolidation is highly likely, though corrections can be expected in sectoral front. Overall uptrend remains intact. 

This column is produced by ARKS Capital Advisors Ltd.

(Views expressed in the article are those of the producer and do not necessarily reflect those of this 

 
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