Market Watch, Stock News

New monetary policy scares stock market

Published by Octron on July 27, 2009

The new monetary policy has given the stock market the jitters with the Nepal Stock Exchange (NEPSE) losing a whopping 29.73 points on Sunday. The sensitive index also dropped 9.57 pointsAccording to stock analysts, the massive downfall of the NEPSE index is due to the new provision of the monetary policy.
The central bank on Friday had come up with a provision in the new monetary policy that commercial banks could include its retained earnings to increase its minimum paid-up capital.

According to the new provision, if commercial banks have enough reserves and surplus, Rs. 400 million can be included from it to maintain paid-up capital at Rs. 2 billion. This means banks do not have to issue rights shares or bonus shares to raise Rs. 400 million.

But banks have to maintain Rs. 1.6 billion paid up capital and can add Rs. 400 million from its reserve if it has retained it adequately.

The NEPSE started to lose since the start of trading on Sunday. Trading was suspended for 30 minutes as the NEPSE dropped by more than 4 percent in the second hour of trading. According

to NEPSE rules, trading will halt for 30 minutes if the NEPSE index changes by 4 percent of the previous day’s NEPSE index before 2 p.m.

A majority of the sub-indices on the floor witnessed a decrease on Sunday with the banking index suffering the most.

The banking sub-index was down by 44.85 points followed by others which were down by 17.62 points. The development bank sector

also suffered a double-digit decline.

None of the 20 commercial banks that were on the trading floor of NEPSE on Sunday saw their stocks going up. Nabil Bank lost the most on the trading floor by shedding 425 points.

The same was the case with development banks. Among nine development banks, seven had their stocks going down with Clean Energy Development Bank losing the most.

Only 44 companies made their presence felt in the secondary market with only five gainers.

The total turnover at NEPSE was Rs 76.31 million through 76,867 units of shares.

Source: Kantipur

Readers Rating: