Poor Performance index dampens hopes
Revival of stock market requires strong measures

By A Staff Reporter

Kathmandu, Dec 8; Once flourishing Nepalese stock market has virtually turned quite frustrating and pessimistic owing to various internal and external factors. Performance index of the Nepal Stock exchange is very poor owing to lack of investors' confidence in the share market.

Besides, fear psychosis of investors due to political instability has triggered a kind of capital flight as a result of which index in the market has witnessed decline.

The other reasons for bearish trend in the stock market, according Dr. Manohar Krishna Shrestha, a stock market analyst are policy of the government, poor attitude of the management of a company, lackadaisical attitude of the regulatory authority like Security Board and no representations of shareholders.

If timely measures is not taken, there is a high -risk of further tumble down of NEPSE index or it could bring the situation of stagnation. External factors like political instability, poor performance of industries, government policy are not only the responsible factors, there are various other various such as - distributing dividend to shareholders, performance of companies, attitude of promoters or management are equally important to win the confidence of shareholders. For how shareholders go on putting their money, as long as the management enjoy huge amount salaries, bonus and other benefits. There are lots of factors of demotivation factors that have obstructed the growth of share market.

In view of Dr. Shrestha, the government has to serious measures to revive the dying stock market. A apart this concerned authorities like Security Board, Nepal Rastra Bank (NRB) should be alert.

There should be a proper mechanism to control aberrations in the stock market so as to promote the confidence of shareholders. If shareholders are owners, they should have that feeling of ownership.

Taking this week's NEPSE index into consideration, timely measures are highly essential to revive the country's stock market.

The NEPSE index has witnessed a slight increase of 1.85 in the span of five days. The index, which was 288.72 in the opening hour on Monday, increased to 290.57 in the closing hour on Friday.

Like in the past banking sector is still ahead of other companies listed in the NEPSE trading floor. The index of the banking sector moved to 309.17 from 302.27, whereas index of manufacturing sector declined to 299.14 from 300.2. Similarly, the index of hotel sector declined to 224.09 from 250.26 and trading sector remained to 102.28. The index of insurance sector has gone up to 307.88 from 305.60. Similarly the index of the other sector remained 147.26 throughout the weekend.

Among 52 companies registered in the NEPSE for trading, transaction of 38 could take place.

A total of 37,426 shares amounting to Rs 159,65,637/- were traded through 785 transactions, whereas the number of transactions in the previous week was 42,940 equivalent to Rs 143,74,034/-

Stock market Analysis

A total of 20 preference shares belonging to Tarragon Regency Hotel are also included in the total transaction of the share this week.

Out of total transactions, commercial banks occupy 75.35 per cent, manufacturing sector occupies 0.07. Similarly, hotel sector occupies 2.33 per cent and insurance sector belongs to 1.73 per cent. Likewise finance sector has occupied second position after banking sector. Its occupancy in total transaction pie is 20.50 per cent. The other sector occupies 0.03 per cent, whereas trading sector has failed to record any transaction this week.

In the NEPSE trading floor, average 20 transactions recorded each day in sales side and 12 in purchase side.

On the basis of transactions, Nepal Merchant Banking and Finance Company was ahead of other companies. It recorded 130 transactions, whereas on the basis of number of shares Lumbini Finance and Leasing Company was ahead of others. A total of 5860 shares belonging to this company were traded in the span of five days. On the basis of turnover Nepal Bangladesh Bank Ltd. (NB Bank) has left other companies far behind. The total transaction outlay of NB Bank was Rs 41,41,240/-

According to NEPSE, its trading floor remained open for five days (Dec 3-7). Among the companies having transactions for five days were Nepal Bank Ltd. (345-330), Nepal Arab Bank (Rs 940), Nepal Indosuez Bank (Rs 1025-1150), Nepal SBI Bank (Rs 1260-1261), NB Bank (Rs (965-971), Everest Bank (650-660), BoK (380-379), Nepal Merchant Bank and Finance (157-161) and Oriental Hotels (Rs 62). Similarly companies having transactions for four days were Standard and Chartered Bank (1950-2050), Himalayan Bank (1351-1400), Lumbini Finance and Leasing (Rs 215-212), and Sagarmatha Insurance (181-183).

Hotel Soaltee Ltd. (100/7000) and Pokhara Finance Ltd. (60/18000) and Necon Air (50/4250) had transaction for one day. According to stockbrokers, Hotel Soaltee has been constantly facing problems owing to its poor performance. The value of its shares in the market is almost insignificant.