--By Bikram Chitrakar

 

During February 17 - March 19, 2014, Nepal’s stock market, as indicated by the benchmark Nepse index, turned down after touching the highest of the last six years. It retreated 38.82 points or 5.08 % to settle at 764.91 by recording its highest 832.70 for the period on February 23, while the lowest was at 754.99 on March 18. Market went in bearish mode for the last week during the review period. It had gone up scaling high starting few days before the CA election. It registered 40 winnings days and 36 losing days after the market opened following the CA elections i.e. since 21 November, 2013.  

 

Nepal Stock Exchange has booked straight three months of green terrain, which slightly corrected after the second week of February. Persistent profit booking at the six year high level pushed the share prices of stocks down which was obvious correction in the market.  

 

Nepal Rastra Bank (NRB) Governor's hint in the mid-term review of monetary policy that the banks may again be restricted from lending againt share certificates was the reson to shake the growing confidance of share investors.   

 

Total turnover of the stock market for the review period declined 23 per cent where as market capitalization dragged down 4.85 per cent. In this period, that market was flooded with 9.62 million additional units of shares through bonus and right offering from the listed companies.  

 

During the review period, investors preferred hydropower and insurance companies. Loan repayment at the end of quarter has also contributed for the downfall in stock price as the investors who borrowed from Banks and Financial Institutions (BFIs) against the mortgage of share certificates were forced to sell their holdings.  

 

Performance by Sector

Commercial banking sector performed dull as the banking sub-index fell 56.65 points to 700.43. Similarly, hotel sub-index dropped by 36.66 points. Sub-index of development banks skidded by 29.59 points followed by 21.15 points down in 'other' sub-index. Manufacturing and trading sub-indices also settled at the red terrain during the review period. 

 

Survivors for the period were insurance and hydropower sectors as they registered a growth of 11.97 points and 14.86 points respectively in their sub-indices.  Sensitive index, a measuring rod for 130 companies in “A Category” drifted down 9.98 points to close at 165.35 while float index tumbled by 1.96 points to settle at 51.89. 

 

A total of Rs. 5.62 billion turnover was realized during the review period from 13.98 units of shares traded through 45,502 transactions. The commercial banks grabbed the largest chunk of sector-wise turnover with 48.31 per cent, followed by insurance sector, which contributed 22.39 per cent. Hydropower sector had 12.60 per cent share and the remainder was covered by other sectors. 

 

Technically, the Simple Moving Average (SMA) of Nepse is outcast by 30 days average as it dominates index with large difference. The possibility of bounce back is still high as it has not crossed the previous support level of 751.79. As suggested by pivot, benchmark index Nepse is expected to face resistance at 812.95 and 860.98 at the most while support will be at 735.94 and 706.96, which is the least expected.

 

 

Chitrakar is a Stock Analyst with Jamb Technologies Pvt Ltd.