Lack of clarity on capital gains calculation sinks the stock marketThe total number of traded shares also plunged to 6,100,560 units from 7,538,130 units.
Nepal Stock Exchange went down 10.97 points last week as the lack of clarity on capital gains calculation continued to sap investor confidence.
Along with a fall in the market index, the average daily turnover also slid to Rs309.20 million last week from Rs357.55 million in the previous week.
The market opened at Rs1,224.04 points on Sunday and fell 9.20 points to close at Rs1,214.84 points. On Monday, the secondary market gained 7.23 points followed by a decline of 8.43 points on Tuesday. The market index saw a brief reprieve after inching up 0.42 points on Wednesday. However, on Thursday, the market slipped again by 0.99 points, bringing the overall market activity down 0.9 percent.
For the past one month, the secondary market has been reeling in the row of confusion over the complexity in calculating the amount of capital gains enforced by the tax authority. After the Ministry of Finance handed over the responsibility to the Securities Board of Nepal, the board moved to allow investors to declare capital gains on their own via an online system.
Stock analysts said this caused more confusion among investors. “Despite the provision of the self-declaration rule, many investors do not have any idea on how to calculate the weighted difference of shares that they purchase on different dates,” said a Tulsi Ram Dhakal, vice-president of Nepal Investors’ Forum.
The sensitive index that measures the performance of blue chips companies also went down 0.98 points to close at 263.71 points, with a downfall in indices of the majority of trading groups.
Last week, investors lost Rs11.80 billion in the book value of their investment portfolio, after the market capitalisation declined to Rs1,539.80 billion from Rs1,551.60 billion.
Except for the trading sub-index, the remaining 10 groups observed a fall in their indices during the review period. Non-life Insurance with a drop of 134.87 points posted the biggest loss, closing at 4,759.17 points. Life-insurance, finance companies, hydropower, hotels and manufacturing also posted double-digit losses in their indices.
Commercial banks also slid 4.51 points. Development bank, ‘others’ and microfinance were among the groups that witnessed a slight drop in their indices.
Trading was the only gainer, picking up 8.87 points.
Regarding individual companies, Soaltee Hotel recorded the largest transaction worth Rs104.95 million.
NIC Asia Bank, Rasuwagadhi Hydropower Company, Agriculture Development Bank and Nepal Investment Bank Limited were also among the top five companies that had the largest amount of shares transactions.
Last week, stocks worth Rs1.54 billion were traded which was 13.48 percent lower compared to the amount in the previous week. The total number of traded shares also plunged to 6,100,560 units from 7,538,130 units.
During the review period, Nepal Stock Exchange listed a total of 4,620,000 units of primary shares of Sabaiko Laghubitta Bittiya Sanstha and Gurans Life Insurance Company.