Nepse starts cooling

Nepali capital market — that touched a historic high of 1064 points on December 16 — has started correcting itself in the recent months. Within three months, Nepse plummeted by more than 300 points to 710.8 points.
Nepse started this week, today, in a negative note with 5.92 points or 0.83 per cent loss to 710.8 points from the last week's closing of 716.72 points.
Flow of more shares like NT's mega-issue, Nepal Agriculture Development Bank's shares and completion of annual general meetings (AGMs) of all financial institutions — that dominate the Nepse — are some of the reasons of the slowdown in the capital market, according to Nepal Stock Exchange (Nepse).
"Our capital market is financial sector driven that is not the real barometer of economy," says Rewat Bahadur Karki, general manager and chief executive officer of the Nepse. "If it were real sector driven," he says, adding that it could be the real mirror of our economy.
Agrees Rabindra Bhattarai, share market analyst, "All the financial institutions have — after AGM — declared their rights and bonus shares increasing the flow of shares in the market pulling the share price down."
Bhattarai even predicts that Nepse may fall as low as 600 points. "Its in downward trend and may dip to 600 points," he says, adding that apart form seasonal impact, the capital market is slowing down due to Nepal Rastra Bank's — the regulatory authority — new directives also.
"People are selling shares to pay financial institutions' loans they have taken against shares, according to new NRB directives," he says. Similarly, new capital fund — in form of loan to buy shares — has also blocked due to NRB's new directives on margin lending.
Investors' are also in a mood to wait and watch due to nearing Constituent Assembly election.
In the fiscal year 2062-63, Nepse saw a trading of Rs 3.45 billion, whereas, it reached Rs 8.36 billion in the fiscal year 2063-64. "In the first eight months of current fiscal year 2064-65, the trading has already touched Rs 13.8 billion," according to the Nepse. "The trading increased by 175 per cent in comparison to the same period of the last fiscal year."

The market capitalisation has also touched Rs 334 billion on December 16 this year from last year's Rs 232 billion in the same period.
Though, the Nepse witnessed trading of 55 listed companies today, all the major key market players — Commercial banks (7.66 points), Hydropower (12.88 points), Development banks (3.16 points) and finance group (2.17 points) — plunged except Insurance group that flared by 8.22 points.