Raids push NEPSE to seven-month low

KATHMANDU, July 26: As a nervous reaction to the raids carried by the government in a number of leading food godowns in the capital on Saturday, Nepal Stock Exchange (NEPSE) dropped sharply by 4.03 percent or 29.73 points, a record loss in seven months, to close at 708.11 points on Sunday, the first day of the week´s trading.

Sensitive index, an indicator of performance of Category ´A´ companies listed in NEPSE, also went down by 4.83 percent or 9.57 points to reach at 188.63 points at the end of the trading. Likewise, float index which calculates the price of ordinary shares in the market, also dipped by 3.99 percent or 2.84 points to end at 68.31 points.

Stock analysts said Saturday´s raids are one of the key factors behind the double digit decline in the benchmark NEPSE, which indicates the investors´ confidence in the stock market.

"Impact of the raids in different go-downs has been seen in the secondary share market. Moreover, investors are on a selling spree taking advantage of higher price of shares as compared to a couple of weeks ago," Nanda Kishore Mundada, president of Nepal Share Brokers´ Association, said.

Mundada also said provision in the recently unveiled monitory policy by Nepal Rastra Bank (NRB) that gives privilege to transfer retained profit and reserve to paid capital base alos triggered the decline.

"Share prices plummeted on Sunday as the monitory policy reduced the chances of issuance of new bonus shares and rights shares in the market," said Mundada. Due to huge decline in the NEPSE, stock market had halt trading at 1:30 p.m., the second half of the trading session for 30 minutes. As per the existing provision, market has to be suspended for 15 minutes in the case of rise or fall in NEPSE by more than 3 percent in the first half, 30 minutes in the case of more than 4 percent rise or fall in the second half and whole trading of the day if the index shots up or falls by more than 5 percent in the third half of the trading session. The NEPSE had shot up by 30.38 points when the trading was halted today.

Loss in the share prices of Nepal Investment Bank, Nabil Bank, Standard Chartered Bank, Nepal Bangladesh Bank and Industrial Development Bank Ltd contributed to the fall in NEPSE.

Remarkable fall in major trading groups´ sub-indices pushed down the benchmark NEPSE on Sunday.

Banking, the key trading group in NEPSE, saw staggering 44.85 points loss to end at 737.82 points. Development Bank and Finance groups also shed 13.03 points and 4.61 points to close at 754.82 points and 694.75 points respectively. Taking the same notes, Others group also fell by a double digit 17.62 points to finish at 669.99 points at the end of the trading. During Sunday´s trading, 76,767 units of shares worth Rs 76.31 million were traded through 704 transactions. Total capitalization, total worth of the shares in the market, reached Rs 484.87 billion at the end of Sunday´s transaction.

REPUBLICA