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Market Analysis
Respite for stock-investors

By R.K.Regmee

R.K.RegmeeNepal Stock Exchange, suffocated for weeks together by continuous decline, had some respite in the past week when its Index recorded a gain of 0.51 point while closing at 365.50 points.

The positive figure recorded by the secondary market could be the result of speculations over performances of financial institutions at the end of the third quarter of the fiscal 2010-11, say analysts. NEPSE felt the relief through nominal growth achieved by a few sub-indices such as those of Others, Hydropower Companies, Finance Companies, and Commercial Banks.

Other sub-sectors, however, could not produce positive result. Notable among the losers in the week are Manufacturing and Processing Companies, Development banks and Insurance.

Economic backdrop

It is really interesting to see NEPSE behave better in the week when most economic indicators appeared not cooperative in adding value to investors' money. Entrepreneurs have been caught by poll fever of electing new leaders on April 12 for their apex organization - Federation of Nepalese Chambers of Commerce and Industries (FNCCI). The race for the top FNCCI post is witnessing unprecedented contest between two panels led by noted national entrepreneurs Suraj Vaidya of Kathmandu and Ajad Shrestha of Pokhara.

They had also been engaged in picking up fresh leadership for Nepal Chamber of Commerce. Surendra Basnet has been given the responsibility to steer the NCC from now on through the 58th annual general meeting of the top body of business persons. Smooth transfer of power in the body from Surendra Bir Malakar to Basnet, an achievement by itself, was, however, not sufficient to pump confidence into investors in NEPSE.

Investment climate of stock market had also been affected by a number of other disturbances in the economy. On top were two incidents gripping Finance Ministry and Nepal Rastra Bank. The former had entered into political turmoil because of rift among ruling political parties CPN UML and UCPN Maoist over presentation of supplementary budget or early budget.

Maoist leader Krishna Bahadur Mahara, who is also the Deputy Premier and Information and Communication Minister, strongly advocated for supplementary budget while opening the Midas EduKit CAN InfoTech exhibition at Banepa's Information Technology Park. It was promptly contradicted by another Deputy Prime Minister Bharat Mohan Adhikari, who as the Finance Minister of Prime Minister Khanal's coalition government abruptly got the cabinet fix the date for early budget on May 3.

Although their mutually exclusive statements on budget have been designed to divert nation's attention from Finance Secretary Khanal's resignation, they have compelled investors to withhold business decisions in NEPSE yard. The emergency-exit of top civil servant in Finance Ministry, observers believe, is the result of political pressure from Adhikari against Khanal's strict stand on Value Added Tax evaders.

Stock traders could not derive any sense of encouragement by the way Nepal Rastra Bank was paralyzed through employees' agitation. Governor Khatiwada and senior officers could not function normally at a time when the economy needed NRB's supervision most for tackling problems related to trade deficit, liquidity crunch, shortage of Indian currency and recovery schemes for banking sector. Disturbing the investors further was the rumour spread widely about Governor's resignation. Employees' Unions have been pressing the management to address a number of grievances including provision for permanent jobs for those employed on contract.

Weekly transactions

NEPSE had a turnover of Rs. 93.47 million from the business of 419,633 shares in 7,920 deals over the week when its Index jumped down from 364.98 points to 364.40, declining further to 364.38 points and rising later to the figure of 365.50 points at the last trading day. nepalnews.com April 10, 2011

(Editor’s Note: Nepalis, wherever they live, as well as friends of Nepal around the globe are requested to contribute their views/opinions/recollections etc. on issues concerning present day Nepal to the Guest Column of Nepalnews. Length of the article should not be more than 1,000 words and may be edited for the purpose of clarity and space. Relevant photos as well as photo of the author may also be sent along with the article. Please send your write-ups to editors@mos.com.np This e-mail address is being protected from spambots. You need JavaScript enabled to view it This e-mail address is being protected from spambots. You need JavaScript enabled to view it)

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