Nepal Telecom (NT) lost Rs 43 per unit share dragging not only the others sub group under which it is listed but also the overall market index by 7.59 points to close the market at the lowest ever in the last two years at 303.2 points today.
The telecom share that was traded at Rs 447 for a unit on Thursday — the last trading day of last week and before book close — today dropped by Rs 43 to Rs 404 a unit pulling the others subgroup by 50.51 points to close at 475.87 points.
It covers almost one-fourth of the total market capitalisation — as of today's trading price — bringing the whole share market down due to the absence of a dividend adjustment mechanism at the share market.
The standard methodology employed by Dow Jones, Standard & Poor's, Reuters and Bloomberg always adjusts for special dividends plus all of the normal capital adjustments like splits, reverse splits, rights issues, capital returns, demergers and spinoffs but absence of such mechanism in the domestic market has always been hurting the general investors' confidence.
Nepal Telecom has announced its fourth annual general meeting on April 4. The annual general meeting is also going to approve Rs 45 per unit share cash dividend.At today's closing price of Rs 443 per unit of NT share, its market capitalisation stands at Rs 66.45 billion which is 23.22 per cent of the total market capitalisation of Rs 286.10 billion.
A slight movement in the share prices of Nepal Telecom changes the direction of the share market due to the existence of 150 million unit shares of the company. It could send a wrong message to investors that shares of other companies are also not doing well as the benchmark index plunged today, despite Securities Board of Nepal, Finance Ministry and central bank's efforts to boost the investors' confidence.
The plunging index
2011-7-18 — 370.15 points
2011-9-18 — 318.56 points
2011-11-18 — 329.38 points
2012-1-18 — 319.92 points
2012-3-18 — 303.2 points
(Source: Nepal Stock Exchange Ltd)