The Nepal Stock Exchange (Nepse) index, which opened at 494.34 points on Sunday, ended the week at 488.45 points on Thursday -- the last trading day of the week, as selling pressure mounted on the stock market.
The dip taken by the benchmark index coupled with 33.38 percent hike in weekly trading amount to Rs 392.79 million also points to surge in selling pressure on the bourse.
“Yes, many investors are dumping shares these days,” Stockbroker Anjan Poudel told Republica. “One primary reason for this is cash shortage triggered by the launch of initial public offering (IPO) by Mega Bank.”
Mega mopped up Rs 14.2 billion through the primary market around two weeks ago as against the target of Rs 699 million. Currently, the entire amount is locked up. “Unless, the excess amount raised by Mega Bank is released many investors will remain short of cash,” Poudel said.
Poudel further said selling pressure is mounting on the stock market as many investors are flocking to purchase rights shares floated by Nepal Bank Limited.
The state-run bank is issuing rights shares in the ratio of 1:9.5 to its existing shareholders. This means holder of every share at the bank will have to purchase 9.5 additional shares at a price of Rs 100 each.
“Although there is still time left for the purchase of these shares, many investors have already started arranging funds for the purpose which is also creating selling pressure on the market,” Poudel said. “In addition, year-end pressure is also building on investors, as many who took loans to purchase stocks will have to make installment payment by mid-July.”
Led by these reasons, most of the sub-indices fell over the week, with banking index ending the week at 480.60 points from 488.08 points on Sunday morning. Other major sub indices, including hydro, insurance, finance companies and development banks, also shed values.
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