NEPSE Weekly: Bearish trend continues ahead of ADBL IPO

Bearish trend continues ahead of ADBL IPO
Republica, 2-Apr-2010

The market continued to remain in a highly oversold stage as buyers backed away before the Agricultural Development Bank Limited (ADBL) initial public offering (IPO) which opens on Sunday. The Nepal Stock Exchange (Nepse) index dropped to a 3 years 5 months low of 443.17 points on Wednesday before retracing in the final trading day of the week. The benchmark index closed at 452.46 points, losing another 2.92 percent.

Despite the impressive performance of NMB Bank (+Rs 26), which closed its further primary issuance on April 2, the Commercial Banking sub-index (-3.08 percent) continued its fall. The loss can be attributed to Bank of Asia (-Rs 52) and Laxmi Bank (-Rs 90). Madhyamanchal Gramin Bikas Bank (+Rs 45) booked top gains again this week but the Development Banking sector (-6.77 percent) posted a huge decrease with the fall in share price of Narayani Development Bank (-Rs 98).

Likewise, the Finance sector (-3.31 percent) posted major decline as NIDC Capital Market (-Rs 151) and Nepal Housing and Merchant Finance (-Rs 130) recorded the highest losses. Weak performance of National Hydropower (-Rs 16) impacted the Hydropower sector (-2.72 percent). Similarly, the Insurance sector (-1.27 percent) fell as well due to the decline in Lumbini General Insurance (-Rs 9). Likewise, the ´Others´ sub-index (-6.15 percent) also plunged as Nepal Telecom Company (-Rs 30) shed value.

The Supreme Court has given a verdict in favor of NRB to limit promoter shares of banks and financial institutions held by a single family to 15 percent. NRB has also decided to provide up to 80 percent refinancing to the banks and financial institutions against good loans. Securities Board of Nepal (SEBON) announced that it is working to promote the entrance of more institutional investors into the secondary market.

Amongst declarations, World Merchant Banking and Finance (-Rs 10) will be giving out 16 percent bonus shares and 6 percent cash dividend instead of 30 percent bonus shares and 10 percent cash dividend. Universal Finance, which closed its books on April 1, has proposed 10 percent bonus shares. On the IPO front, Agricultural Development Bank is set to open its IPO for 9,600,000 units on April 4. The top turnover of the week was booked by Bank of Kathmandu (Rs 8,790,170) which accounted for 8.18 percent of the total volume. Additionally, Bank of Kathmandu Promoter Shares (Rs 7,472,250) also traded significantly during the week.

Technical analysis tools indicate that the market still remains at an oversold stage which marks a further downtrend exacerbated by the light trading volume.

This is an analysis from Beed Invest Pvt Ltd. No expressed or implied warrant is made for usefulness or completeness of this information and no liability will be accepted for consequences of actions taken on the basis of this analysis.