Nepal Stock Exchange (Nepse) last week shed 17.3 points to close at 1,462.56 points as the demand for shares slowed amid banks’ reluctance to offer margin loans at existing interest rates due to liquidity crunch.

The secondary market that opened at 1,479.86 points on Sunday fell 2.14 points to close the day at 1,477.72 points. On Monday, the market shed 11.63 points and closed at 1,466.09 points.

The index slipped 3.05 points and 0.81 points on Tuesday and Wednesday, respectively, before posting a gain of 0.33 points on Thursday. Overall, the market closed the week 1.16 percent lower.

Santosh Mainali, general secretary of Stockbrokers’ Association of Nepal, attributed the fall in Nepse to investors’ dilemma over banks’ liquidity position. “Investors were unwilling to invest due to unclear information about liquidity situation in financial institutions,” he said.

Mainali said the market could have also dived due to higher supply of shares. “The number of shares has increased due to the listing of new rights and bonus shares, initial public offerings and further public offerings,” he said. “On the other hand, the demand has dived as banks have been delaying sanctioning of margin loans.”

Along with the Nepse index, the sensitive index that measures the performance of group ‘A’ companies also dipped 2.64 points to close at 317.32 points. Total value of shares listed on the exchange declined by Rs14.65 billion,

with the market capitalisation diving to Rs1,645.62 billion from Rs1,660.27 billion.

Almost all sub-groups, except for trading (up 1.13 points), shed points. The insurance sub-index (down 78.37 points) was the biggest loser. Mainali termed the fall in the insurance sub-index after scaling new highs “market correction”.

The insurance sector was followed by manufacturing (down 25.96 points), hydropower (down 25.45 points) and commercial banks (down 21.03 points), finance companies, others, hotels and development banks.

Last week, Prabhu Bank (promoters’ shares) posted the biggest turnover of Rs209.3 million. Standard Chartered Bank Nepal stood second with a transaction of Rs140.98 million. Prabhu Bank (ordinary shares), Siddhartha Bank and Nepal Life Insurance rounded out the top five. Nabil Balance Fund 1 took the pole position in terms of the number of shares traded (3,262,000 units).

Last week, shares of 153 listed companies were traded. Despite the fall in the Nepse index, the transaction amount rose 6.96 percent to Rs1.85 billion. The number of shares traded also increased to 11,318,270 units from 10,033,780.

Right Shares/Bonus Shares

Company    Type    Units

United Finance    Bonus    927,099

Progressive Finance    Rights    6,885,648