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Bullish Days Ahead
By Rabindra Bhattarai
Nepse index gained marginally (1.25 points) during the month of June. The market opened with the index at 280.15 and closed at 281.15. It had closed at 279.99, losing 14.39 points, in the month of May.
The bearish market of May turned bullish on the eve of June and remained so until June 6. The ensuing bearish trend continued to meet 277.87 point on 14th June. During the rest of the month the overall market remained bullish as compared to May.
During the month, not a significant change was observed in the share prices of the companies. Prices of all the companies were fluctuating marginally, excepts in the case of Standard Chartered Bank Nepal Ltd (SCBNL) and Bishal Bazar Company Ltd. (BBCL). The share price of the SCBNL went up during the month by Rs.100 whereas the price of BBCL went up by Rs.92.
Two high volume transactions were carried out during the month – 18,250 shares of Laxmi Bank Ltd (LBL) on June 6 and 10,000 shares of Harisiddhi Bricks and Tile Factory Ltd. (HBTFL) on June 19.
The market is expected to rise, in the coming days, particularly after the closure of the fiscal year 2004/05 in mid-July. Though the Economic Survey, which the Finance Minister is going to make public soon, is not expected to depict a hopeful picture of the economy, traditionally Nepal’s stock exchange is not affected much by such information. It is affected more by the financial reports published by the banks. Going by the quarterly reports from the banks so far, the market expects the banks to report higher annual profits. That will enthuse investors causing buyers’ pressure on the prices. They will buy shares of the banks in the expectation of dividends.
Moreover, the investors will take new loans and buy shares as their previous loans get retired at the end of the current fiscal year.
Due to a strong control and monitoring mechanism created by the Nepal Rastra Bank (NRB), banks and finance companies are required to publish their periodic financial performance every quarter or every six months. But such a strong control mechanism does not exist for other companies. Therefore, many other companies (those that fall in the other sectors like manufacturing, trading, insurance, hotel and other sectors) do not publish their periodic financial report to inform the shareholders, creditors and the prospective investors. Thus the stakeholders must wait until their AGM is held to know their reality. This is why the other sectors are not playing the driving role in the market.
If the publication of the quarterly financial reports is also made compulsory for the other companies, it may help to boost the share market to some extent at least.
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