The stock market has been on a downhill course with the political uncertainty showing no signs of being resolved. The Nepal Stock Exchange (NEPSE) declined by 57.43 points during the first quarter of the current fiscal year. The index plunged from 477.73 points on July 19, 2010 to 420.3 points on Oct. 13, the last day of trading before the Dashain holidays.
Although NEPSE showed some signs of recovery during the last eight days before Dashain, stock experts did not term it natural. “With the end of the first quarter, the market had been pushed up to avoid a margin call,” said Nanda Kishore Mundada, president of the Nepal Stockbrokers Association. “I doubt NEPSE will continue to rise after Dashain.”
Some stock analysts attributed the pre-festival upswing to increased investor confidence with the introduction of the Mutual Fund Regulation and the Central Depository System (CDS) regulation. These two regulations came into effect just ahead of Dashain. The Mutual Fund Regulation has been seen as an urgent need to benefit small investors.
Likewise, with the CDS regulations in place, the government has paved the way for setting up a CDS company as per the Securities Act 2006. NEPSE will have a 51 percent stake in the proposed company while a number of banks and financial institutions will hold the rest. The CDS would make ownership transfer of securities fast and reliable and maintain a database of investors in a more scientific way with computer-based trading Excluding other market factors, market experts held the higher rate of interest on borrowing as being responsible for the fall in the stock market. Interest rates have been increased due to a liquidity crunch in the second half of the last fiscal year.
“Currently, the major concern of investors is the rate of interest excluding other things, which directly or indirectly affects the bourse,” added Mundada.
Unlike in previous years, announcements of cash dividends and bonus shares at the end of the fiscal year failed to cheer up investors. As a result, the stock market dived to a four-year-low on Sept. 20. NEPSE had dropped to 402.11 points on Nov. 1, 2006.
According to the concerned stakeholders, the amount of cash dividends and bonus shares did not match the expectations of investors. “Investors were expecting to receive bonus shares instead of cash dividends,” said Jagadish Agrawal, a stock expert. “The cash dividends were quite low compared to the rate of borrowing.”
During the period under review, 1,651,218 units of bonus shares of six companies were listed on the capital market. Likewise, 19,697,990 units of right shares of four companies and 42,575,000 ordinary shares of four companies were listed on the stock exchange.
Meanwhile, the stock market realised a total turnover of Rs. 1.82 billion over the first quarter leading to market capitalization amounting to Rs.355.72 billion.
Date NEPSE Index
2010-07-18 477.73
2010-07-18 468.53
2010-08-16 453.7
2010-09-16 404.43
2010-10-13 420.3
source;ekantipur
Although NEPSE showed some signs of recovery during the last eight days before Dashain, stock experts did not term it natural. “With the end of the first quarter, the market had been pushed up to avoid a margin call,” said Nanda Kishore Mundada, president of the Nepal Stockbrokers Association. “I doubt NEPSE will continue to rise after Dashain.”
Some stock analysts attributed the pre-festival upswing to increased investor confidence with the introduction of the Mutual Fund Regulation and the Central Depository System (CDS) regulation. These two regulations came into effect just ahead of Dashain. The Mutual Fund Regulation has been seen as an urgent need to benefit small investors.
Likewise, with the CDS regulations in place, the government has paved the way for setting up a CDS company as per the Securities Act 2006. NEPSE will have a 51 percent stake in the proposed company while a number of banks and financial institutions will hold the rest. The CDS would make ownership transfer of securities fast and reliable and maintain a database of investors in a more scientific way with computer-based trading Excluding other market factors, market experts held the higher rate of interest on borrowing as being responsible for the fall in the stock market. Interest rates have been increased due to a liquidity crunch in the second half of the last fiscal year.
“Currently, the major concern of investors is the rate of interest excluding other things, which directly or indirectly affects the bourse,” added Mundada.
Unlike in previous years, announcements of cash dividends and bonus shares at the end of the fiscal year failed to cheer up investors. As a result, the stock market dived to a four-year-low on Sept. 20. NEPSE had dropped to 402.11 points on Nov. 1, 2006.
According to the concerned stakeholders, the amount of cash dividends and bonus shares did not match the expectations of investors. “Investors were expecting to receive bonus shares instead of cash dividends,” said Jagadish Agrawal, a stock expert. “The cash dividends were quite low compared to the rate of borrowing.”
During the period under review, 1,651,218 units of bonus shares of six companies were listed on the capital market. Likewise, 19,697,990 units of right shares of four companies and 42,575,000 ordinary shares of four companies were listed on the stock exchange.
Meanwhile, the stock market realised a total turnover of Rs. 1.82 billion over the first quarter leading to market capitalization amounting to Rs.355.72 billion.
Date NEPSE Index
2010-07-18 477.73
2010-07-18 468.53
2010-08-16 453.7
2010-09-16 404.43
2010-10-13 420.3
source;ekantipur
1 comment:
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