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Market Analysis
NEPSE opens 2011 on feeble note

By R.K.Regmee

R.K.RegmeeThe gusto found among industry/business entrepreneurs in the context of opening of Nepal Tourism Year 2011 celebrations and hosting of series of trade exhibits could not simply transfer into the yard of Nepal Stock Exchange on the first trading week of the New Year. The NEPSE finished business during the period in bearish tone while closing at 400.43 points, losing 0.20 point.

Analysts had expected the high spirit seen in tourism and trade arena would trigger sympathetic chain impact on financial market. But the same did not happen because investors got more precautious in their behaviour. They interpreted the political and economic state obtaining in the country as not favourable for pursuing risk-path of investment. Troubling them most was the fear of void that might emerge in peace process after the UNMIN-exit this week-end.

The government's assurance that the vacuum would be ably filled by the Special Committee could not take investors into confidence. Similarly, senior political leaders' pledge that they would work out a post-UNMIN-peace mechanism any way failed to be convincing to them.

Because of this, the rise in number of stocks offered for trade in NEPSE floor could not result in promising market turnover. The turnover actually dived into Rs. 113.41 million from last week's Rs. 116.23 million. The semblance of stability found in the secondary market in previous week could not be maintained in the past week.

Altogether 115 companies participated in trading of 499,295 shares in 6.357 deals. Major sub-indices could not depict promising performance in business. A handful few demonstrated gain which proved too little to boost the index.

Sub-indices of sectors such as those of Development Bank, Commercial Banks, Finance and the Others were negative: the loss ranging from 1.87 %, 1.34 %, 1.23 % and 0.22 % respectively. Hotels and Hydropower felt comfortable in their gain of 5.11 % and 0.19 % during the period.

Avoiding margin call

Investors appear conscious in getting the market somewhat stabilized to avoid the margin call from lenders - banks and financial institutions - towards the end of second quarter. The last two weeks of the past year reflected this spirit well in the market. They appeared highly concerned as NEPSE closed the first trading day of 2011 at 398.01 points. It reversed the trend on the following day registering 399.45 points, and continued upward to 400.76. The gain could not, however, continue on the last day.

A number of non-trading factors may have compelled the market to end the week red, say analysts. "The overall economic scenario of the country cannot be taken as friendly to the secondary market. The skeleton administration works being performed by government because of its care taker nature is also responsible." Nepalnews.com Jan 9, 2011

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