Share prices continue to drop as monetary policy fails to elate investors

Published On: July 15, 2017 12:27 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 14: The Nepal Stock Exchange (Nepse) benchmark index fell 1.48 points this week to close at 1,582.67 points on Thursday, the last trading day of the week.

In terms of day to day trading, the stock market remained largely stable this week after a heavy fall in previous weeks. As the fiscal year comes to an end, investors seemed to be reluctant to put their money into the market, according to stock brokers. Many investors who have borrowed for the stock investment are instead selling their stocks to repay their loans. Others who have to file their taxes are also absent from trading in the market, say brokers. 

Last week, the Nepal Rastra Bank (NRB) had unveiled the monetary policy for upcoming fiscal year 2017/18 which did not receive positive response in the market. Some of the provisions like fixing the margin type of loans to 40 percent of core capital of a bank have been interpreted by the investors to tighten the flow of loans toward stock market. Through the monetary policy, the central bank has said that it wants to see the loans of the bank and financial institutions being focused toward productive sector instead of sectors like stock market and real estate that fuel speculative investment. 

"The monetary policy has nothing to offer to the stock market. Neither does it have any new measures to stabilize the interest rates. So it did not help to stop the bearish trend of stocks," said a broker. "The dispute over value added tax which is likely to be imposed on investors has also worried investors, contributing to the downward trend of stocks," he added. 

Insurance was the highest loser of the week as its sub-index plunged 24.8 points to close at 8,350.29 points. Hotels group shed 23.82 points and closed at 2,221.57 points. Hydropower and finance groups also ended 13.87 points and 15.67 points lower, respectively at 1,918.01 points and 729.62 points. Banking, the heavyweight group, fell 1.19 points to finish at 1,418.81 points. 

Manufacturing and processing group, however, jumped 22.02 points to finish at 2,366.58 points. 'Others' group also logged a gain of 9.55 points to close at 699.62 points. Development Bank group also went up 3.26 points to end at 1,945.37 points. Trading group remained unchanged at 212.76 points. 

Nabil Bank Ltd (Promoter) topped the list of companies in terms of turnover (Rs 302.9 million) while NMB Sulav Investment Fund-I remained at the top in terms of number of traded shares (2.72 million). 

Nepal Life Insurance Company Ltd has the highest number of transactions (2,758) in the stock market. 

A total of 11.43 million units of shares of 168 companies worth Rs 4.2 billion were traded in the market this week through 32,245 transactions. 

Shares from rights issues of Deprosc Laghubitta Bikas Bank Ltd and Bhargav Bikash Bank Ltd as well as bonus shares of Reliable Development Bank Ltd and Surya Life Insurance Company Ltd were listed in Nepse this week for trading.

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