Commercial banks and life insurance stocks rally to lift NEPSEMarket is expected to underperform in the near term due to liquidity concerns, say brokers
The Nepal Stock Exchange (NEPSE) index ended in positive territory last week following a rally in commercial bank and life insurance stocks which contributed to a massive jump in the total turnover, brokers said.
The market index closed on Thursday at 1,131.92, up from 1,112.79 a week ago. The total turnover was worth Rs358,839,860, up from Rs243,391,320 the previous Thursday. The total number of traded shares stood at 1,095,188. There were 6,085 transactions in all and as many as 168 scrips were traded. At the end of trading last week, the total market capitalisation stood at Rs1,437,508.33 million.
"Along with commercial banks, the insurance sector — especially life insurance companies — rallied with Nepal Life Insurance registering big volumes on the market during the latter half of the week. Insurance investors have suffered the most along with hydropower investors in the last few years, so some signs of rebound will be well appreciated by the investors. Like in the previous two weeks, NMB and Nepal Bank continued to be the most traded stocks on the exchange. This is primarily due to the fact that both companies have yet to close their books, meaning those who invest in this stock at the moment will be entitled to the potential dividends offered by these two companies," a portfolio manager from ARKS Capital Adviser's Ltd told the Post.
Market participants say a major catalyst driving the current market sentiment is the biggest merger in Nepal’s banking sector between Global IME and Janata Bank, that got formalised. Policymakers have been constantly been encouraging big mergers, which is a positive sign, they said.
During the course of the week, Nirdhan Uttan Lagubitta declared a 25 percent bonus and 15.53 percent cash dividend. Nepal Bangladesh Bank also declared a 5 percent stock dividend and a 7 percent cash dividend, while Civil Bank declared a 6.57 percent cash dividend.
However, brokers said the market will likely underperform in the coming weeks due to liquidity concerns given that the credit crisis in the banking system is continuing to be a stumbling block.