KATHMANDU, March 12: Nepal Stock Exchange (Nepse) index climbed to a record high of 1,318.03 points week amid speculations among investors that government was mulling over raising paid-up capital of insurance and micro-finance companies.
Stock brokers told Republica that demand for securities of insurance and micro-finance companies were very high this week. Investors scrambled to buy shares of insurance and micro-finance companies with a hope that they will issue right and bonus shares to meet the new capital requirement.
Nepal Rastra Bank (NRB) is expected to increase paid-up capital floor for micro-finance institution. Similarly, Beema Samiti is mulling over raising paid-up capital of insurance companies.
The benchmark index gained 11.49 points over the week to close at 1,318.03 points on Thursday – the last trading day of the week. The sub-index of Insurance group went up by a whopping 185.95 points this week.
Anjan Raj Poudyal, managing director of Thrive Brokerage House Pvt Ltd, said investors were after stocks of insurance and micro-finance companies throughout the week. He also said there was not improvement in price of banking stocks this week. “The insurance regulator has already directed insurance companies not to distribute cash dividend to shareholders. It is expected to announce capital increment plan in the near future,” Poudyal said, adding that rise in share price of all insurance companies is not based on their performance. “The growth is illogical as not all insurance companies are making handsome profits.”
He further added that Nepse was likely to see some corrections in the coming weeks.
Meanwhile, Securities Board of Nepal (Sebon) issued a statement this week, advising investors to be cautious while investing in securities. Sebon’s statement has come at a time when the benchmark index is on a record-setting spree.
Securities worth nearly Rs 1 billion were traded on Thursday alone. Four out of five top companies in terms of transaction value over the week were insurance companies. The trading floor of Nepse remained open for only two days this week as Monday, Tuesday and Wednesday were declared public holidays.
A total of about 2.9 million units of shares of 134 companies worth Rs 1.74 billion were traded in the market this week. Total turnover is down 37.24 percent compared to last week.
Insurance group was the biggest gainer of the week as its sub-index gained 185.95 points this week, followed by Hydropower sub-index which logged gains of 55.92 points. The sub-indices of Development Bank and Hotels groups also went up by 32.72 points and 12.15 points, respectively. Similarly, Banking sub-index went up by a marginal 1.89 points.
Finance and Others groups, however, saw their sub-indices shed 4.48 and 2.35 points, respectively, while Manufacturing, and Trade sub-indices remained unchanged this week.
Week’s top five companies
(In terms of transaction amount)
Company – Transactions
Neco Insurance Company – Rs 137.64 million
Siddhartha Insurance – Rs 81.26 million
United Insurance Company – Rs 67.09 million
National Life Insurance Company – Rs 64.67 million
Agricultural Development Bank Ltd – Rs 60.85 million
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