Sunday, June 5, 2011

Chilime shares oversubscribed by eight times

Nepse plunges to over six year low to 327.81 points

Despite continuous poor performance of secondary maket and investors' low confidence Chilime Hydropowers's primary issue has been oversubscribed by almost eight times surprising those, who have been claiming there is no money in the market.
The company had floated 134,4000-unit primary shares worth Rs 548.83 million to the public on May 31 at Rs 408.36 per unit, adding Rs 308.36 premium on the face value of Rs 100 per unit.
"But it has been able to collect Rs 3.85 billion as 101,500 applicants applied for its primary issue oversubscribing it by almost eight times to around Rs 3.85," Securities Board of Nepal director Niraj Giri, said adding that the paid up capital of the company will be Rs 960 million, after this primary issue.
Chilime Hydropower -- with installed capacity of 22.1 MW is a subsidiary company of Nepal Electricity Authority with its 51per cent equity ownership -- is based in Rasuwa district and is a model hydel project that has distributed 10 per cent shares to the locals.
The Chilime shares are being traded at around Rs 900 per unit currently making it a blue chip share in the secondary market that plunged today to over six-year low of 327.81 points from today morning's opening of 333.76 points.
The key player commercial bank subgroup and others sub group dragged Nepse today as Everest bank lost Rs 102 per unit share, Bank of Kathmandu lost Rs 27 per unit share and Laxmi bank lost Rs 24 per unit share. Nepal Telecom tht is under others sungroup lost Rs 9 per unit share to pull the others subgroup by 10.57 points.
"The financial sector dominated market cannot sustain for long," said Nepse general manager and CEO Shanker Man Singh. "Poor economic growth coupled with absence of real sector's strong presence made the secondary market less vibrant," he said, adding that the instable politics has also contributed in its downfall.
Though, we are trying to involve institutional investors like Citizen Investment Trust and Employers Provident Fund to invest that could stablise the market, the rumour-prone market has continuously been looking down, he added.
To build the confidence of investors', the Nepse has also asked two brokers to furnish explanation suspecting their involvement in market manipulation. "We have asked Broker No 3 and Broker No 5 to explain their role in maintaining some financial institutions share prices," Singh said.

How low can Nepse go
KATHMANDU: The market could plunge to 304.24 points, if the current trend continues, according to technical analysis. The first day of the market -- on Sunday -- the market crossed the first support and closed at 327.81 points, according to Pivot calculation. "The second support will come at 326.38 points," it revealed, adding that Nepse will further drop to 315.31 points, if the market crosses the second support too. The fourth support comes at 304.24 points, if it breaks the third support and drops further.

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