Nepse sheds 21.92 points as investor wealth shrinks by Rs40 billion

The Nepal Stock Exchange (Nepse) index saw a decline of 21.92 points, or 0.80 percent, during the trading week of June 15 to 19, closing at 2,702.11. This downturn erased an estimated Rs40 billion in investor wealth, reducing the total market capitalization to Rs4.61 trillion from Rs4.65 trillion.

Broad-based profit booking and reduced trading activity dampened investor sentiment. The Sensitive Index, tracking 'A' class stocks, also dropped by 3.11 points. Trading turnover decreased by 13.13 percent to Rs20.04 billion, with an average daily turnover of Rs4.008 billion.

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The overall market is fundamentally weak. Most listed companies have weak balance sheets and have not distributed dividends for years. How can investors be attracted to buy such companies?

Most sectoral sub-indices ended the week in negative territory, with the Others subindex experiencing the steepest fall. The Manufacturing and Processing subindex was the sole gainer, rising 0.62 percent. Ankhu Khola Jalvidhyut Company was the most actively traded stock by volume and turnover, despite a price drop.

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Investors are not ready to enter the market as they fear they may be the next target for investigation.

Market analysts expressed pessimism about a short-term rebound. Ramhari Nepal attributed the weakness to fundamentally unsound listed companies, poor balance sheets, and a lack of dividends, making them unattractive to investors. He also pointed to ongoing investigations into high-profile figures linked to the stock market, which have eroded investor confidence, and an imbalance between increasing supply and weak demand.

However, Jagannath Dhungel offered a more optimistic outlook, suggesting a potential short-term rebound in the coming weeks as the dividend season approaches. He noted the index's ability to hold above a psychological level.

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New companies continue to be listed, increasing supply, while demand remains weak. As a result, the market is oversupplied.