Nepse crumbles under selling pressure

KATHMANDU, APR 01 -

The capital market continued its bearish run last week too and the benchmark index dropped below the 300-point mark for the first time this fiscal year.

The Nepal Stock Exchange (Nepse) index closed week at 298.90 points on Thursday—3.78 points less than 302.68 points on Sunday, the opening day.

A majority of sib indices suffered loss last week due to selling pressure. Commercial banks, manufacturing companies, hotels, others, hydropower companies, finance companies and development banks shed 2.74, 13.91, 2.45, 7.05, 21.04, 1.65 and 1.99 points, respectively. The gainers were trading sector and insurance companies, up 1.16 and 1.34, respectively.

“As the third quarter end is approaching, investors are selling their shares to service their bank loans,” said Anjan Raj Poudyal, president of Stock Brokers’ Association of Nepal. “This is creating calling pressure in the exchange.” He added that shares which were pledged in the banks and financial institutions (BFIs) are being auctioned, pushing down prices.

As far as investors’ attitude is concerned, they are still on wait-and-see mode. “Even those who are willing to invest in the capital market think that share prices will fall further and are procrastinating share purchase,” said Poudyal. “However, in my opinion, share prices will not

fall further.”

Investors have been complaining about high interest rates on margin lending. Although the central bank removed ceiling on margin lending, banks themselves seem to be reluctant to make investment in the stock market due to relatively higher risk.

Last week, Nepse’s market capitalisation came down to Rs 282.06 billion from previous week’s Rs 286.56 billion. However, the turnover increased by 69.94 percent, mainly due to the selling pressure. The exchange registered a turnover of Rs 137.69 million last week compared to Rs 81.02 million in previous week.

Nepal Life Insurance Company realised the highest individual turnover of Rs 22.80 million, while Machhapuchhere Bank posted the highest number of shares traded (170,493). Sanima Bank’s shares were traded most, with the bank witnessing 347 transactions.

Source: Kantipur