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Shares close lower amid CGT woes

2018-06-05

Nepali stocks ended broadly lower on Monday as talks between representatives from investor associations and government regarding the recent changes in Capital Gains Tax (CGT) ended inconclusively.

Investors appeared cynical as the government issued circular on Sunday, changing the gain calculation method on bonus and right shares, increasing tax liability for them. In some cases, investors are liable to pay CGT even when a transaction is closed with loss.

The Nepal Stock Exchange (Nepse) index turned volatile during Monday's trading as the index swung back and forth around the 1,270-point mark. At the close, the index was down by 5.11 points to end the day at 1,268.84 points. Turnover also decreased slightly compared to the preceding day as investors became skeptical. Shares worth Rs 424 million changed hands on Monday.

Except for the Others Sub-index, which gained over 3 percent, all major sub-indices logged losses on the day. Microfinance companies led the league table of companies posting loss with its sub-index losing almost 2 percent. Hydropower Sub-index followed suit as it lost over 1.72 percent. Sub-indices of Hotels, Trading and Insurance groups also shed over 1 percent each.

Mega Bank Ltd topped the list of most active stocks on Monday, logging total transactions of over Rs 34 million. Shares of Nepal Bank Ltd came second with a turnover of Rs 23 million. Rastriya Beema Company Ltd, Nepal Life Insurance Company Ltd and Nepal Investment Bank were among other active stocks on the day.

With regards to advances, Khani Khola Hydropower Company Ltd was the top performing stock as its share price surged over 7 percent. Shares of Nepal Telecom Ltd also closed 4.61 percent higher. Further, Mutual Fund Unit of Global IME Sammunat Scheme – 1 also saw its price increase by over 4 percent.

On the other hand, Global IME Laghubitta Bittiya Sanstha Ltd was the worst performer of the day as the microfinance institution saw its share price go down by 7 percent. Similarly, shares of Mero Microfinance Bittiya Sanstha Ltd, Ngadi Group Power Ltd and NIC Asia Growth Fund also lost over 5 percent each.

ARKS technical analysis indicates a small bearish candlestick formation as the index closed about 5 points lower after gyrating about 23 points intra-day. This depicts the state of indecision witnessed in Monday's session. The index is now hovering around the support zone of 1,260-1,270-point level, the break of which might stimulate downtrend continuation.

Looking at the sell-off seen in the past few days, both Relative Strength Index (RSI) and Moving Average Convergence/ Divergence (MACD) are pointing toward the negative range. Hence, investors are suggested to be cautious before entering the market.

Source: My Republica