Stock Market News Picks of the Week

  1. NEPSE rally comes to a halt

After two weeks of steady growth, the NEPSE index suddenly dipped in the last 2 trading days of this week.

With the roller coaster of highs & lows,the index gained mere 5.45 points(0.25%) in the week to close at 2149.39 on Thursday. The weekly turnover amounted to Rs.23.55 billion.

The NEPSE danced like Yo-yo market in the week as it soared for two days, only to plummet just as quickly in the next two trading days leaving investors scratching their heads.

  1. Sector-Wise Index outlook of the week.

Sectors Opening Index Closing Index Percentage change
Mutual Fund 14.03 14.63 4.28
Hydropower 2,426.31 2528.44 4.21
Trading 2,340.65 2417.97 3.3
Life insurance 10,593.37 10,692.16 0.93
Commercial Bank 1,395.70 1406.82 0.8
Non life insurance 9,123.56 9174.02 0.55
Development Bank 3,805.52 3814.5 0.24
Investment 68.11 68.18 0.1
Others 1,566.84 1552.46 -0.92
Hotel & tourism 3,276.75 3199.48 -2.36
Finance 1,829.45 1774.04 -3.03
Microfinance 5,005.01 4809.12 -3.91
Manufacturing & Processing 5,610.25 5357.1 -4.51
  1. Dividend announcements this week

S.N. Name of the Companies Bonus Shares Cash Dividend Total Distribution
1. Api Power Company Ltd.(API) 7.5% 0.3947% 7.8947%
2. Jyoti Bikas Bank Ltd. (JBBL) 3% 3.8% 6.8%
3. Prabhu Insurance Company Ltd. (PRIN) 6.7% 0.35% 7.05%
4. Mahila Laghubitta Bittiya Sanstha Ltd. (MLBSL) 47.5% 2.5% 50%
5. Agriculture Development Bank Ltd.(ADBL) 2% 11% 13%
6. Mahuli Laghubitta Bittiya Sanstha Ltd. (MSLB) 20% 5% 25%
7. Deprosc Laghubitta Bittiya Sanstha Ltd. (DDBL) 10% 11.0526% 21.0526%
8. Himalayan Everest Insurance Ltd. (HEI) 2.75% 0.14% 2.89%
9. Taragaon Regency Hotel Ltd. (TRH) 0 8.42% 8.42%
10. Swarojgar Laghubitta Bittiya Sanstha Ltd. (SLBBL) 22% 1.1579% 23.1579%
11. NMB Laghubitta Bittiya Sanstha Ltd. (NMBMF) 10% 0.5263% 10.5263%
12. Chhimek Laghubitta Bittiya Sanstha Ltd. (CBBL) 22% 3.26% 25.26%
13. Swabalamban Laghubitta Bittiya Sanstha Ltd. (SWBBL) 15% 6.05% 21.05%
  1. Commencement of joint operation by commercial banks following merger

S.No. Merged Banks New name Swap Ratio Joint Operation from
1. Global IME Bank Ltd. &

Bank of Kathmandu Ltd.|“Global IME Bank Ltd.”|100:100|Poush 25|
|2.|Prabhu Bank Ltd. &

Century Commercial Bank Ltd.|“Prabhu Bank Ltd.”|100:100|Poush 26|
|3.|Nepal Investment Bank Ltd. &

Mega Bank Ltd.|“Nepal Investment Mega Bank”|100:90|Poush 27|

The share trading of all 3 newly formed banks shall be suspended for a period of 15 days from the respective date of beginning of integrated financial transactions.

  1. Two more commercial banks move ahead with merger

Laxmi Bank Limited & Sunrise Bank Limited have signed an MOU and announced merger on 25th Poush. After completion of this merger, the number of A Class Commercial Banks in Nepal will be reduced to 20. The number was 26 a few months ago.

  1. Why are so many commercial banks merging?

NRB, in the monetary policy, has stated that it will continue to provide merger-related discounts for one more year if commercial banks and microfinance start integrated operations with the institution of the same class or acquire the institutions of the same class by mid-January,2023.

NRB has been providing a number of incentives like relaxation in CD Ratio requirements, tax benefits, relaxation in sectoral lending requirements,1% point interest discount in general refinance facility by NRB and many more as mentioned in Merger-Acquisition Bylaw,2073 to the BFIs that go for merger & acquisitions.

Nepal Rastra Bank has been on a mission since 2011 to streamline the banking sector, trimming down the number of institutions in order to raise the capital of the bank which will increase BFIs ability to lend in large investment projects & to withstand economic downturns, reduce unhealthy competition, reduce operation cost and expand market coverage attracting fresh deposits.

A recent survey conducted by Nepal Rastra Bank (NRB) has concluded that there is no need for more than 15 commercial banks in Nepal.

  1. Ajod Insurance to merge with United Insurance

Ajod Insurance Ltd. has signed a Memorandum of Understanding (MOU) to merge with United Insurance Company (Nepal) Ltd. on Poush 27, after a previous merger agreement between Ajod Insurance and Prabhu Life Insurance failed to materialize due to a disagreement over the swap ratio.

Beside the commercial banks, the insurance sector is also seeing consolidation at a rapid pace after a directive from the Insurance Board requiring life insurance & non-Life insurance companies to increase their paid up capital to Rs.5 billion & Rs.2.5 billion respectively by end of 2079 B.S.

  1. IPO Proposal approved.

Securities Board of Nepal approved the IPO proposals of Atmanirbhar Laghubitta Bittiya Sanstha Ltd. The company will now issue 2,03,380 shares of Rs.100 each worth Rs.2,03,38,000.

  1. New application for IPO & Right shares issue.

Nepal WareHousing Company Ltd. has applied to SEBON for IPO & thus has been added by SEBON to its pipeline. The company proposes to float 13,75,000 shares of Rs.100 each to the general public.

National Hydropower Company Ltd.(NHPC) also seeks SEBON approval for 50% (i.e.10:5) right shares issue. The company has applied for permission to issue 82,21,459.7178 shares of Rs.100 each worth Rs. 82,21,45,971.78