Weekly share trading amount totaled Rs 282.72 million from Sunday to Thursday --days when the stock market remains open -- as against Rs 417.33 million in the previous week. “The main reason for this slump was the launch of initial public offering (IPO) by Mega Bank on Sunday,” Narendra Sijapati, president of the Nepal Stockbrokers Association, told Republica.[break]
Although IPOs generally do not affect transactions on the stock market, the situation was different this time as “many investors did not resort to margin lending to purchase shares floated on the primary market”.
“Investors are currently shy of margin lending (credit extended against share certificates) as they are not optimistic about improvements taking place in the stock market,” Sijapati said. “So many are simply selling stocks to finance other transactions.”
This selling pressure caused the benchmark index to take a dip of 1.8 points, or 0.36 percent, over the week to close at 498.35 points on Thursday -- the last trading day of the week.
Commercial banks and insurance companies were the main losers this week. Everest Bank, for instance, saw Rs 15 wiped off from its stock value over the week to close at Rs 1540 on Thursday. Stock price of Nepal Investment Bank, on the other hand, fell to Rs 724 by Thursday from Sunday´s opening of Rs 730, while share price of Bank of Kathmandu slipped Rs 3 over the week to close at Rs 600 on Thursday.
These losses pulled banking sub-index to 492.91 points on Thursday from Sunday´s opening of 495.14 points.
Few insurance companies also took heavy beating over the week, with Sagarmatha Insurance seeing erosion of Rs 240 in its share value over the week to Rs 1,160. Likewise, share price of Shikhar Insurance ended the week at Rs 520, down from Rs 594 recorded on Sunday.
Among others, shares of Nepal Telecom fell by a moderate Re 1 to end the week at Rs 535.
“It looks like the selling pressure will continue for some time as the mid-July deadline for interest payment on loans investors acquired to purchase shares is approaching,” Sijapati said.
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