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December, 2004 |
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Biztoon |
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Buy Nabil Sell
Lumbini By Rabindra bhattarai The NEPSE index for November showed a recovery trend mainly due to the forthcoming annual general meeting (AGM) effect as predicted in the previous month in this column. A negative effect was observed in the previous month due to the festival effect. The coming AGMs of the companies have hiked investors’ expectations and also increased the share prices of almost all companies. It is reflected in the index. Over the month of November 2004, the index gained by 6.04 points riding on the continuous increase in the share prices of banking companies. The bullish trend of index turned unexpectedly bearish by the end of the month and fell by 2.68 points during the last two days. It lost 2.12 points in a single day (November 30), but the bearish trend is not going to continue. During the month Laxmi Bank dominated the market on the basis of transaction volume. Normally, a newly listed company should have a high volume transaction but in this case the high volume was accompanied by a decrease in share prices after its listing, though it started gaining in price gradually over the month. During the month, the NEPSE floor started trading on a new bank, Lumbini Bank Ltd. (LBL), the 13th bank to register shares in the Nepal Stock Exchange. The share price of LBL can not be expected to rise above the introduction price (i.e. the price of the first day transaction) because the bank’s operating profit in the first quarter of the fiscal year 2004-05 has decreased by 49.20% as compared to the same period of the previous fiscal year 2003-04. Therefore, a suggestion for the investors would be to sell the holdings if they can get the introduction price. The price of LBL shares is expected to fall to a level equal to its par value some months later. The latest bearish trend in the NEPSE is largely due to LBL shares. Similarly, investors are suggested to buy the shares of Nabil Bank to maximise returns. It is learnt that Nabil is going to distribute 65 percent cash dividends to the shareholders at its forthcoming AGM. If one invests in Nabil shares, buying them at the current prevailing price (around Rs. 1,200), the return would be approximately 65 percent, annualised. That is phenomenal, isn’t it? |
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