The NEPSE index(-5.09%) witnessed a sharp decline throughout the week with the benchmark index closing at 534.32 points, the lowest index level since May 27, 2007. The index was pulled down primarily by readjustments in the share prices of various companies post book closures for rights and bonus shares and cash dividends. In addition, the IPOs of Kasthamandap Development Bank and Pathibara Development Bank lured investors away from the secondary market.
The Commercial Banking sub-index (-7.16%) was unable to sustain its ascent from the previous week, mainly due to readjustment in the share prices of Himalayan Bank (-Rs 457) and the book closure of DCBL Bank (+Rs 1) for its 5% bonus shares. The Finance sector (-5.80%) also took a big dip as Reliable Finance (-Rs 55) closed its books for 20% bonus shares and 10% cash dividends, and International Leasing and Finance (-Rs 291) did the same for 1:2.1 rights shares. Despite significant gains posted by Narayani Development Bank (-Rs 24) and Excel Development Bank (+Rs 2), the Development Bank sector (-5.43%) failed to impress as the stocks of a majority of the companies slid. Depreciation in the stock value of Chilime Hydropower (-Rs 25) hit the Hydropower sector. Similarly, the Insurance sector (-2.38%) also declined because of the price of Nepal Life Insurance (-Rs 84). Similarly, a fall in the share price of Nepal Telecom Company (-Rs 3) ruled out an uptrend in the Others sub-index (-0.58%).
To boost investor confidence, NRB announced it is injecting an additional Rs 3 billion into the market to ease the liquidity crunch. The central bank has also extended the timeframe to mid-April 2011 for commercial banks to raise their paid- up capital to Rs 2 billion. Prabhu Finance (-Rs 10) and Premier Finance (+Rs 6) are distributing 10.53% cash dividends and 1:1 rights shares respectively. NMB Bank (-Rs 17) which listed 53,586 rights shares confirmed that 19% of its promoter shares will be converted into ordinary shares. Nepal Investment Bank (-Rs 60) became the first bank in Nepal to receive an ´A´ rating from the Indian Credit Rating Agency (ICRA). Arun Valley Hydropower, Excel Development Bank and Crystal Finance Limited were listed on the stock exchange this week. Guheshwori Merchant and Finance (-Rs 16) announced 2% cash dividends along with 10% bonus shares. With IPOs and book closures of several companies lined up along with the divestment of promoter shares into ordinary by several major companies, no sign of an imminent reversal is apparent.
REPUBLICA
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