Nepse sets new records as bank shares sizzleNepal’s share market continued its record breaking streak on the second day of trading on Tuesday with both the Nepal Stock Exchange (Nepse) index and the turnover hitting all-time highs.
Nepal’s share market continued its record breaking streak on the second day of trading on Tuesday with both the Nepal Stock Exchange (Nepse) index and the turnover hitting all-time highs.
The Nepse soared 28.01 points to 1,866.50 driven by the financial sector. Likewise, transactions totalled an all-time, single-day high of Rs2.75 billion.
Commercial banks saw shares worth Rs1.42 billion changing hands followed by insurance companies (Rs463 million), development banks (Rs454 million) and finance companies (Rs146 million).
Among the top 10 companies in terms of turnover, nine are commercial banks. Siddhartha Bank posted the highest turnover of Rs254 million marking its two-day streak of the highest turnover. The bank’s per share price has increased to Rs1,415 from last week’s closing price of Rs1,230.
Lately, there has been growing interest in buying stocks of banks and financial institutions as well as insurance companies, according to stock brokers.
Stakeholders attributed the growth to an impressive performance by banks during the last fiscal year despite a prolonged Indian blockade affecting businesses.
On Tuesday, the Nepse witnessed 5.8 million shares being traded in 11,743 transactions. Out of the nine trading groups, seven observed a growth in their index except the manufacturing and production sector which lost 64.38 points.
Bottlers Nepal (Tarai), Nepal Grameen Bikas Bank, Surya Life Insurance and Rastriya Beema Company (promoter) lost the most.
Reason behind scramble for Siddhartha shares
Siddhartha Bank posted the highest turnover of Rs254 million on Tuesday marking its two-day streak of the highest turnover. The massive trading in Siddhartha Bank shares, according to stockbrokers, is the result of information leaked about its potential high earnings per share and possible high dividend distribution. A total of 181,715 Siddhartha Bank shares were traded on Tuesday, the sixth largest number of shares traded.
“Investors were attracted to Siddhartha Bank’s shares due to information regarding a possible 40 percent increment in earnings per share as the company had earned good profits,” said a broker. “Moreover, the bank is expected to distribute fair dividends and issue rights shares in the upcoming days.”
Meanwhile, senior bank officials said that the market had been largely driven by the company’s fundamentals and that it had performed as per expectations of the market. According to officials, investors have considered the 25 percent allocation of rights shares and healthy dividend distribution as major factors to purchase the bank’s shares.
Beside information about potential high earnings per share, the bank’s stock has received more attention after it merged with Business Universal Development Bank which boosted its financial strength. During the merger process, trading in its stocks were closed. “After trading resumed, investors scrambled to buy its shares as their prices were lower compared to other commercial banks,” the broker said.