Nepse looks at historic low

The banks and financial institutions brought the Nepse down to near historic low today as the market closed at 407.2 points from the opening of 410.29 points.

The secondary market is loosing its steam due to low investors' confidence coupled with increasing bank interest rates and overflow of the shares -- ordinary, rights and bonus. "Had the market size increased, the overflow of shares would have been absorbed," market analyst Rabindra Bhattarai said adding that the market might plunge the historic low of 405.45 points.

Standard Chartered Bank Nepal lost Rs 45 per unit share today to close at Rs 2,225 per unit share pulling the banks down and Butwal Finance lost Rs 51 per unit to close at Rs 629 per unit share pulling the finance company down.

Though the banks and financial institutions' contribution to the total trading has come down to 72.54 per cent from around 85 per cent, these are still the dominent factors in the total trading.

"Noone is listening our suggestions," complained president of Brokers' Association of Nepal Nanda Kishor Mundada. "Had the government given ear to our suggestions, the market would have been stabilised," he said, adding that the association has forwarded a gamut of suggestions to finance ministry for the market development.

The year-on-year (y-o-y) market capitalisation has also declined by 26.53 per cent to Rs 376.0 billion in mid-July 2010, the end of the fiscal year 2009-10. "The ratio of market capitalisation to GDP stood at 31.87 per cent against 51.74 per cent a fiscal year ago," according to the centyral bank report. "Of the total market capitalisation, bank and financial institutions accounted for 72.5 per cent followed by manufacturing and processing companies at two per cent, hotels at 1.4 per cent, business entities at 0.4 per cent, hydropower at 5.3 per cent and other economic sectors at 18.3 per cent."

The y-o-y Nepse index declined by 36.23 per cent to 477.73 points in mid-July 2010 due to overwhelming supply of securities in the market as well as feeble progress in the economic and political situation of the country. "The Nepse was 749.10 a year ago in mid-June 2009," it added.

Likewise, Nespe sensitive index -- based on July 2006 -- stood at 116.14 point in mid-July against 198.77 in mid-July 2009. "The Nepse float index -- calculated on the basis of closing transaction as of August 24, 2008, as base market value -- remained at 44.30 points in mid-July 2010, a contraction of 37.80 per cent compared to a fiscal ago. It was 71.22 points in mid-July 2009.

Dateline

2010-1-4 -- 540.12 points

2010-2-4 -- 501.4 points

2010-3-16 -- 480.49 points

2010-4-28 -- 405.45 points

2010-5-16 -- 440.00 points

2010-5-30 -- 506.35 points

2010-6-30 -- 455.75 points

2010-7-29 -- 461.63 points

2010-8-15 -- 454.24 points

2010-9-15 -- 407.2 points