Weak investor sentiment squeezes NEPSE

The market continued to remain bearish as investor sentiment deteriorated throughout the week. The NEPSE index registered losses on four consecutive days till Wednesday mainly due to increases in the price of Nepal Telecom (+Rs. 10) and Bank of Kathmandu (+Rs. 146) shares. The highlight of the week was the reconciliation among directors from the feuding factions at the Bank of Kathmandu. [break]



A Special General Meeting has been called on July 22 to elect a new board to which Nepal Rastra Bank will subsequently hand over the management. Meanwhile, the Public Development Bank issued its IPO this week and it has reportedly been oversubscribed by almost 20 times. The rush of investors towards the primary market in the last few weeks has been a major factor in NEPSE´s downturn in recent weeks. The index declined by 0.47% this week to 667.43.



Financial institutions were the key players this week as they topped the gainers´ as well as losers´ charts. Though Fewa Finance (+Rs. 90) which is issuing 1:2 rights shares topped the gainers´ chart along with Lalitpur Finance (+Rs. 85), the Finance sub-index slipped slightly (-0.66%) after a high gain last week. Among the sectors, Hydropower (+0.77%) was the biggest gainer. Butwal Power Company (+Rs. 20) and National Hydro Power (+Rs. 6) contributed to the sector´s gain. Commercial Banking (-0.75%) was the biggest loser as most major banks-- Nabil Bank (-Rs. 70), Himalayan Bank (-Rs. 50) and Standard Chartered (-Rs. 35) -- registered a decline. Insurance (-0.46%) declined as well. Development Banking (+0.06%) registered a slight increase.



The market turnover for the week was Rs. 462,619,746 -- a 103.88% increase over last week. However, mutual transactions of National Hydro Power Company (Rs. 71,735,580), Nepal Bangladesh Bank (Rs. 60,212,225) and Nepal Credit and Commerce Bank (Rs. 58,297,580) accounted for 45.97% of the week´s total turnover. NB Group which is also a major investor in both aforementioned banks, sold 800,000 shares of National Hydro Power to Rajdhani Investment Fund on July 1. If these transactions are not taken into account, and the market turnover for only ordinary shares is tallied, market turnover in fact decreased by 8.11% from last week to Rs. 206,676,380-- a low figure in terms of market activity. Technical analysis indicators signal a continuation of the bearish trend for next week.

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