Nepse begins 2010 with decline

The Nepse index (-2.24%) started 2010 with a sharp decline to close at 535.81 points on Thursday, the lowest index level since December 8, 2009. The index was primarily pulled down by the supply pressure experienced by the market throughout the week. Despite minor increments in the total turnover (Rs 176,385,636), the market witnessed lower average daily turnovers. Standard Chartered Bank (-Rs 110) registered the highest volume (Rs 22,997,923) which accounted for 13.03% of the weekly turnover. [break]



The Commercial Banking sub-index (-3.34%) was affected by depreciation in the stock prices of key banks like Nabil Bank (-Rs 155), Sunrise Bank (-Rs 5), which announced a 10:6 rights issue, and Global Bank (-Rs 100) which is experiencing price readjustment post book closure.



Despite increases in the share prices of Siddhartha Finance (+Rs 24) and Civil Merchant Bittiya Sanstha (+Rs 35), both of which declared 1:1 rights shares, the Finance Sector (-0.59%) failed to impress as United Finance (-Rs 285) adjusted its market price post book closure. Similarly, the Development Banking sector (-1.55%) too did not fare well as Gurkha Development Bank (-Rs 54) closed its book for 10% bonus shares on January 1 while it proposed 2:1 rights issue. The Hydropower sector (-3.61%) was the biggest loser amongst the sub-indices this week as Chilime Hydropower (-Rs 70) and Butwal Power (-Rs 105) experiencing price readjustment shed values. Likewise, the Insurance sector (-0.26%) declined as share price of Life Insurance Company Nepal (-Rs 10) went down. Similarly, fall in the price of Nepal Telecom Company (-Rs 1) denied an uptrend in the ´Others´ sub-index (-0.19%).



Amongst other capital market highlights, Mahalaxmi Finance is issuing 1:3.37 rights shares. On the IPO front, Pathibhara Bikas Bank allotted its IPO on January 5. Nerude Laghubittiya Bank closed its IPO on January 6 while Sewa Bikas Bank opened its IPO on January 7.



Nepse´s privatization proposal illustrates that the company plans to raise its capital from the existing Rs 34 million to Rs 300 million.



NRB announced that it will inspect about a dozen commercial banks regarding their capital requirement which should not be less than 10% of the total risk weighted exposure.



Nepse has urged stockbrokers to start operations outside the valley as soon as possible in order to expand the secondary market. This should augment the growth in market volume. However, technical analysis indicates a downtrend in the market for the next week.

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