Daily transaction slips below Rs150m markThe value of transactions on the Nepal Stock Exchange (Nepse) on Wednesday plunged below Rs150 million as potential investors held back with a bearish trend continuing to prevail in the country’s sole bourse.
The value of transactions on the Nepal Stock Exchange (Nepse) on Wednesday plunged below Rs150 million as potential investors held back with a bearish trend continuing to prevail in the country’s sole bourse.
Stock prices have been falling for the past few months. According to Nepse, the average single day transaction amounted to Rs215.44 million last week.
During the period mid-June to mid-July, the average daily transaction stood at Rs270 million, down 23 percent from the previous month. The figure stood at Rs670 million during the period mid-April to mid-May.
During the period mid-June to mid-July 2016-17, the average daily transaction was Rs964 million. The figure has dropped by around 72 percent during the review period this year. The Nepse had a record high daily turnover of Rs2.78 billion on July 27, 2016.
According to stockbrokers, the stock market is sluggish because there are no immediate prospects of bonus and rights issues. “As most of the banks and financial institutions have already fulfilled the capital requirement fixed by the regulator, they are less likely to issue bonus and right shares,” said a stockbroker who asked not to be named. Shares of banks and financial institutions make up around 80 percent of the stocks listed on Nepse.
The market has also been affected by an increase in the supply of shares and high interest rates. Although banks were expected to lower interest rates with the loanable fund crisis easing off, many of them are still charging as much as 14 percent interest on margin loans.
In the last fiscal year, primary shares worth Rs78.59 billion were listed on Nepse, including bonus shares worth Rs33.08 billion issued by 112 companies. “At a time of slow demand, the increase in supply has sent prices tumbling,” according to a stockbroker.
On Wednesday, 474,861 shares worth Rs149.19 million were traded. The Nepse index declined marginally by 0.89 points to close at 1,187.32 points. Life insurance lost the most with a drop of 22.36 points while hotels gained 37.46 points.