Shortage of loanable funds spook investorsThe response to margin trading was lukewarm as well.
With investor confidence shrinking rapidly, the daily turnover fell as low as Rs183 million on Thursday last week. Overall, the average daily turnover stood at a mere Rs205.17 million during the four days of trading. The stock market was closed on Sunday.
The secondary market reopened at 1,149.01 on Monday and fell 12.05 points to close at 1,136.96 points. On Tuesday, the market, however, added 5.09 points in its index, followed by a decline of 5.01 points on Wednesday.
On Thursday, the market inched up marginally by 0.71 points. Overall, the market fell 0.98 percent during the review period.
Stockbrokers attributed the slump to the declining interest of large investors in the secondary market despite the inception of the long awaited margin trading last week. So far, the response to margin trading has been lukewarm. “At the time when the market is reeling, the shortage of loanable funds has adversely affected market transaction,” said Bharat Ranabhat, president of Stockbrokers’ Association of Nepal.
The sensitive index that measures the trading of shares of blue chips companies also slid 2.8 points to close at 249.12 points with a fall in the indices of almost all sub groups including commercial bank, which commands a large portion of the market capitalisation.
Except for hydropower, indices of the remaining 10 trading groups went down during the review period. Hotels lost the largest of 51.43 points to close at 1,791.34 points. Similarly, manufacturing, non-life insurance, microfinance and commercial banks posted double-digit losses.
‘Others’, development banks, life-insurance, finance companies and trading witnessed nominal values in their indices. Hydropower was the only gainer, the index of which inched up 0.04 points.
With a downfall in transaction volume, the market capitalisation also declined to Rs1,445.56 billion from Rs1,459.68 billion, making investors lose Rs14.12 billion in the book value of their investment portfolio.
Last week, Prabhu Bank witnessed the largest transaction volume of Rs117.71 million. Siddhartha Bank, promoters’ shares of Asian Life Insurance, Agriculture Development Bank and promoters’ shares of Mega Bank Nepal finished strong in terms of the transaction amounts.
There were cumulative transactions of 3,334,530 units of shares worth Rs820.70 million. Nepal Stock Exchange listed 68,946.95 units of bonus shares of Mithila Laghubitta Bittiya Sanstha during the review period.