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Nepse rises as govt, investors put an end to CGT row

2018-06-07

Trading resumed in Nepal Stock Exchange (Nepse) in the second half Wednesday's trading session after investors withdrew their protest against the new capital gains tax (CGT) calculation method enforced by the Inland Revenue Department (IRD).

The protest was called off following the government's decision to put the new calculation method on hold for the time being. As per the calculation method, CGT on selling bonus and right shares has to be calculated with face value as the base rate.

The market witnessed a large sell off on Sunday as soon as the circular was issued. Backlashes from individual investors and investors' associations ensued subsequently. On Monday, representatives from different associations discussed the matter with the government. But the discussion ended inconclusively.

As a result, investors chose not to do any transaction on Tuesday even though the market was open for trading. Consequently, no turnover was recorded on the day.

The protest continued on Wednesday as well, and no shares were traded until the first half of the trading hours.

The benchmark Nepse index ended 13.91 points higher to close at 1,282.75 points in Wednesday, recording turnover of Rs 238 million. Major sectors also followed the broader market. Reflecting the strength seen in the insurance segment, Insurance Sub-index rose 2.24 percent. Microfinance Sub-index was also up by over 2 percent. Others Sub-index was the only loser of the day, shedding value by 1.2 percent at the close.

In terms of market activity, Nepal Investment Bank Ltd (Promoters Shares) was the most active stock, recording a turnover of over Rs 39 million. Mega Bank Ltd came second, logging total turnover of Rs 15 million.

Microfinance companies dominated the list of advances led by shares of Nagbeli Laghubitta Bikas Bank Ltd which rallied 10 percent. Other top gainers include Khanikhola Hydropower Company Ltd, RSDC Laghubitta Bittiya Sanstha Ltd and Janautthan Samudayik Laghubitta Bikas Bank Ltd.

Conversely, Kalika Microcredit Development Bank Ltd slumped the most, losing over 3 percent. Shares of Shangrila Development Bank Ltd and United Modi Hydropower Ltd also lost over 2 percent each.

On the announcements front, Surya Life Insurance Company Ltd has proposed 16.8 percent bonus shares to its shareholders. However, it is subject to approval from its Annual General Meeting (AGM) and Securities Board of Nepal (Sebon). Further, CBIL Capital Ltd is set to be the first merchant banker to go public. It is awaiting Sebon's nod to launch IPO worth Rs 30 million.

As per ARKS technical analysis, market retraced and gained slightly on Wednesday having ended past five days in red. However, the market is still far from entering an uptrend. Nonetheless, cross of the immediate resistance of 1,300-point mark with significant volume can present a short term buying opportunity for investors.

Source: My republica