NEPSE Rebounded After the Pandemic-Induced Fall: A Sectorwise Analysis of the Leading Stocks and a Look Into the Future

It is without a doubt that due to the global pandemic, the whole world faced a serious economic downturn, leading to negative GDP growth in some countries. Talking about Nepal, it faced a serious downturn in major sectors such as tourism, agriculture, industries. According to the world bank, services exports, goods exports, and remittances contracted by 57.4%, 62.1%, and 43.4% respectively between March and May 2020.

The whole world’s stock market had a serious nose-dive due to the global pandemic and NEPSE was no exception. The NEPSE index had a huge sell-off from March-01, 2020, and fell by more than 31% till June-29, 2020; a fall of a little over 442 points.  

When we observe the past trends of NEPSE; the only Stock Exchange of Nepal seems to have its own cycle i.e. 5 years of bull and 3 years of a bear cycle. Before the pandemic hit our nation, the market seemed to have completed its long bear cycle and was moving towards its new bull cycle. The market started to show an uptrend from Dec-01, 2019, but as soon as the government announced lockdown around the nation, the market started to have a nose-dive from March-01, 2020. However, the story turned out to be different for NEPSE because it changed its trend to upward from June-30, 2020.

To have a clear overview of how the market performed after the low created by the market, Sharesansar carried out research on how much each sector and companies from each sector gained from June-29, 2020 till the last closing date of Nov-26, 2020.

Commercial Bank:

The banking sub-index made a low of 1016.28 points on June-29, 2020; a decline of 29.4%. From this low, the index gained a little over 421 points; 41.45% increment till Nov-26, 2020.

From the commercial bank, Nabil Bank Limited (NABIL) rebounded the highest with a total of 71.21% till Nov-26, 2020. Nepal Bank Limited (NBL) rebounded about 70.87%. Prime Commercial Bank Limited (PCBL) secured the third position with a 70.87% rebound. Similarly, Prabhu Bank Limited (PRVU) and Kumari Bank Limited (KBL) rebounded about 67.48% and 66.27% respectively.

Pic taken from SSPRO

Development Bank Limited:

Development Bank Index rebounded by almost 32% from the previous low of June-29, 2020.

From this sector, Corporate Development Bank Limited (CORBL) gained about 92.11% from the low of June-29, 2020 till Nov-26, 2020. Kamana Sewa Bikas Bank Limited (KSBBL) gained about 60.43% while Saptakoshi Development Bank Limited (SAPDBL) gained about 52.38%. Similarly, Karnali Development Bank Limited (KRBL) gained about 46.94% and Shangrila Development Bank Limited (SADBL) rebounded 42.34% till Nov-26, 2020.

Pic taken from SSPRO

Finance:

Finance Index increased by about 43.80% from the low of June-29, 2020 till Nov-26, 2020; an increment of 273.79 points.

From this sector, Nepal Finance Limited (NFS) rebounded 118.49% till Nov-26, 2020. Gurkhas Finance Limited (GUFL) secured the second position with a gain of 88.68%. Guheshwori Merchant Banking & Finance Limited (GMFIL) rebounded 79.46%. Similarly, ICFC Finance Limited (ICFC) and Goodwill Finance Company Limited (GFCL) rebounded 78.79% and 56.43% till Nov-26, 2020.

Pic taken from SSPRO

Hotel:

The hotel sector rebounded 32.74% from the low of June-29, 2020. The index soared to 2031.20 points on Nov-26, 2020.

From the hotel sector, Taragaon Regency Hotel Limited (TRH) rebounded about 69.06% and closed at Rs. 306/share. Oriental Hotel Limited (OHL) rebounded about 63.40% till NO-26, 2020. Soaltee Hotel Limited (SHL) rebounded about 28.22%.

Pic taken from SSPRO

Hydropower:

The hydropower index soared about 66.73% till Nov-26, 2020. The hydropower index was at 886.33 points on June-29, 2020 but the index increased by 591.48 points and closed at 1477.81 on Nov-26, 2020.

From the hydropower sector, Ankhukhola Hydropower Company Limited (AKJCL) rebounded the most by 220%. Rairang Hydropower Development Company Limited (RRHP) soared by 193.33%. Arun Valley Development Company Limited (AHPC) increased by 168.48% placing itself in the third position. Similarly, Ngadi Group Power Limited (NGPL) and Synergy Power Development Limited (SPDL) soared by 143.81% and 141.05% respectively.

Life Insurance:

After the low of 6747.07 points on June-29, 2020, the life insurance sector rebounded about 62.59% to 10970.28 points.

Surya Life Insurance Company Limited (SLICL) rebounded the most from the life insurance sector, by about 84.17%. The stock closed at 663/share on Nov-26, 2020. National Life Insurance Company Limited (NLICL) rebounded by about 74.04% from the low of 520/share. Asian Life Insurance Company Limited (ALICL) rebounded by 64.29% securing the third position. Finally, Gurans Life Insurance Company Limited (GLICL) and Nepal Life Insurance Company Limited (NLIC) rebounded 63.08% and 55.61% respectively.

Manufacturing and Products:

After the decline of about 29% from March-01, 2020, till June-29, 20202, the market rebounded about 76.69% and the index closed at 4406.09 points.

Himalayan Distillery Limited (HDL) rebounded the most by around 169%. Shivam Cement Limited (SHIVM) rebounded by 122.80% and Bottlers Nepal (Terai) Limited (BNT) rebounded by about 51.41%.

Microfinance:

Microfinance sub-index rebounded around 45.22% till Nov-2, 2020.

From this sector, Nadeep Laghubitta Bittiya Sanstha Limited (NADEP) rebounded the most by 83.90%. Suryodaya Laghubitta Bittiya Sanstha Limited (SLBS) rebounded by 78.55%; 431.13 points increment. Mithila Laghubitta Bittiya Sanstha Limited (MKBBL) closed at 1028/share on Nov-26, 2020; a 70.20% increment in the share price. Similarly, Aarambha Chautari Laghubitta Bittiya Sanstha Limited (ACLBSL) and NMB Laghubitta Bittiya Sanstha Limited (NMBMF) rebounded by about 64.73% and 61.57% respectively.

Non-Life Insurance:

Non-Life Insurance index rebounded by a whopping 92.84% and closed at 9720.70 points on Nov-26, 2020; an increment of 4679.91 points.

Neco Insurance Company Limited (NIL) rebounded the most by 133.77% and closed at Rs. 1080/share on Nov-26, 2020. Shikhar Insurance Company Limited (SICL) rebounded by about 109.36% from the low of Rs. 825/share of June-29, 2020. Himalayan General Insurance Company Limited (HGI) rebounded by about 117.28% and secured the third position. Similarly, Nepal Insurance Company Limited (NICL) rebounded by about 102.81%.

Others:

Others index gained a massive 130.89% till Nov-26, 2020 and closed at 1528.05 points.

Nepal Reinsurance Company Limited (NRIC) got listed and its shares started trading on June-29, 2020. The stock closed at 384/share on an opening day. However, the stock rebounded by a huge 215.80% till Nov-26, 2020. Hydroelectricity Investment and Development Company Limited (HIDCL) rebounded by around 134.17%. Similarly, Citizen Investment Trust (CIT) and Nepal Doorsanchar Company Limited (NTC) rebounded by about 128.99% and 82.41% respectively.

Trading:

The trading index rebounded by a huge 193.57% till Nov-26, 2020 from June-26,2020.

From this sector, Salt Trading Corporation (STC) rebounded by about 200.96% and closed at 7506/share on the last trading day. Bishal Bazar Company Limited (BBC) closed at 4000/share which is a rebound of 158.06% from the low of June-26,2020.

Mutual Fund:

Mutual Fund is a different financial vehicle that is made up of a pool of money that is collected from individual investors to invest in securities. Shares of Mutual funds are traded in the stock market but the trading of these funds doesn’t contribute to the volatility of the stock market.  

Wrapping Up: 

Warren Buffet in an interview said that the stock market can be a good forecaster of the economy from time to time. However, there is an exception to it. Since the stock market is a forward-looking tool, it might discount the current economic downturn. However, if Mr. Market discounts the current economic stress and pressure in corporate earnings and if the results don’t show up as expected then there Mr. Market needs no reason for the sell-off/downtrend. But the major question here is, “How certain are the investors about the future and on which factor are they basing their assumptions on if they are discounting the current economic stress?”