Insurance, manufacturing buoy Nepse index
The sub-indices of manufacturing and insurance propped up the Nepal Stock Exchange (Nepse) index by 0.66 per cent or 10.78 points week-on-week to rest at 1,646.53 points in the trading week between July 23 to 27.
With a significant growth of 9.32 per cent and 7.59 per cent in the manufacturing and insurance sectors, respectively, Nepse index recorded positive change over the review period. The sub-index of insurance sector went up to 9,675.93 points with a positive change of 682.82 points, while the sub-index of manufacturing sector closed at 2,651.09 points by growing 226.13 points.
Narendra Sijapati, former chairperson of Stock Brokers Association of Nepal (SBAN), opined that investor optimism was back due to the capital increment plan submitted by the insurance companies to Insurance Board (IB). “Insurance companies have to increase their paid-up capital within this fiscal year. For this, they have submitted their capital plans to IB, which helped boost the market,” he said.
Moreover, the market growth was also supported by the fact that a majority of the listed companies are ready to publish their annual financial reports for fiscal year 2016-17. “Investors are betting on financial sector companies to have made good profit in the last fiscal, which has created a positive vibe among investors,” he said.
The IB has already directed all the insurance companies operating in the country to increase their paid-up capital by the end of this fiscal. As per the direction, life insurance companies should increase their paid-up capital to Rs two billion and non-life firms have to have paid-up capital of Rs one billion by mid-July, 2018. Currently, life insurance firms are required to have paid-up capital of Rs 500 million and non-life firms must have paid-up capital of Rs 250 million.
In the week, share price of Rastriya Beema Company soared by a staggering 26.07 per cent or Rs 3,650 to Rs 17,650. The company, which does not even meet the current requirement with paid-up capital standing at merely Rs 120 million, should increase it to Rs one billion. Likewise, share price of Life Insurance Corporation Nepal also increased by 4.71 per cent to Rs 2,490.
The sub-index of development banks also rose by 1.92 per cent to 2,029.4 points. Share price of Kabeli Bikash Bank increased by 15.02 per cent to Rs 605 in the week. Likewise, share price of Lumbini Bikas Bank also soared by 20.65 per cent to Rs 222.
Sub-indices of hotels, trading and finance also helped boost the market. Index of hotel sector closed at 2,315.67 points with a gain of 0.79 per cent or 18.11 points. Similarly, finance sector index closed at 754.81 points with growth of 1.19 per cent or 8.89 points. Sub-index of trading went up by 0.63 per cent or 1.35 points to 214.11 points in the week.
Meanwhile, the sub-indices of class ‘A’ financial institutions, hydropower and others fell during the review period. Banking sub-index landed at 1,432.78 points by dropping two per cent or 29.31 points. Share price of commercial banks like Nepal SBI fell by 2.21 per cent to Rs 929 and that of Nabil rested at Rs 1,627 by shrinking 1.87 per cent.
Others and hydropower followed suit by falling 0.45 per cent to 692.68 points and 0.58 per cent to 1,931.54 points, respectively.
In the week, the sensitive index fell to 346.23 points by shrinking 0.35 per cent, whereas, float index rose to 120.21 points with growth of 0.15 per cent.
In the review period, 9.58 million unit shares of 170 companies were traded through 43,368 transactions that amounted to Rs 5.53 billion. The traded amount was 16.75 per cent higher than the previous week.
Interestingly, all the top five companies in terms of turnover during the review period were insurance companies. Prabhu Insurance topped the chart with Rs 277.85 million. It was followed by Nepal Life Insurance Company with Rs 249.27 million, Rastriya Beema Company with Rs 213.02 million, Nepal Insurance Company with Rs 184.67 million and Prime Life insurance with Rs 164.54 million.
In terms of number of transactions, Nepal Life Insurance Company was the forerunner with 3,205 transactions. Likewise, National Hydropower Company came at the top in terms of number of shares traded, with 864,000 of its shares changing hands.