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Market Analysis
NEPSE checks falling spree

By R.K.Regmee

The month-long falling spree in Nepal Stock Exchange got arrested in the past week when the secondary market jumped from 390.97 points to 399.54 gaining 1.91 %. The sub-indices of sectors - commercial banks, hotels, manufacturing and processing companies, and development banks - were instrumental in checking downward trend in NEPSE.

Analysts explain the positive trend as the result of trading dynamics that feature stock market on occasions particularly at a time when selling pressure persists for longer period. The gain, they say, might initiate upward trend to some extent in future "but it cannot be interpreted as signal to change the bearish trend into bullish one."

If the message of Nepal Rastra Bank's scheduled review of provisions for margin lending could be communicated properly to stock investors, the floor of NEPSE will have a different positive atmosphere. Experts have already emphasized the need for NRB to undertake measures for motivating investors in NEPSE.

The stock market should not be allowed to be the victim of whims of investors, they say adding financial measures to make it buoyant should be pursued promptly. The reasons why the measures undertaken for boosting the NEPSE have not yielded desired result should also be analyzed.

What sort of impact the arrival of Laxmi Capital, a subsidiary of Laxmi Bank Limited and Akash Investment Bankers Limited for undertaking merchant banking will create in the arena of investment is something to watch. Similarly the issue of the delay noticed in entry of new stock brokers should also be studied carefully for its impact on the NEPSE behaviour.

NEPSE's gain on the eve of the year-end week could be considered as reassuring when compared to the way the secondary market had opened this year. It had opened the year in a rather gloomy note. A comment on J anuary 9 posted in nepalnews.com had noted then: "The pulse-reading of Nepali economy through the Nepal Stock Exchange Index in the first week of January ending Thursday would indicate gloom for investors. The decline shown by the figure -2.24 closing at 535.81 happens to be the lowest in four weeks. It raises a question: will the fall continue in future?"

Trading in the week

NEPSE went uphill in the last two days of the week - moving from 394.84 points on Wednesday to 399.54 on Thursday. Some 501,600 shares were traded engaging 112 companies in 7,174 businesses.

The turnover, however, remained in negative zone - a fall by 8.03 %. Previous week's turnover of Rs.126.90 million fell to Rs.116.70 million in the past week. Sectors categorized as Others, Insurance and Finance could not end the week in positive arena. Trading companies saw no change in their performance.

The writer can be reached at dpal@columnist.com.

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