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In the past six weeks, NEPSE has shown some positive signs. The index was unwilling to sink below 1,110 and instead moved north from 25 November 2019. Now, it is expe­riencing a tough call at 1,170, while still managing to stay above 1,150. The positive rally is mainly sup­ported by the non-banking scrips. As discussed in my last column, the Nepali bourse is dominated mainly by the banking and financial institu­tions-related sub-indices. Only if the banking sub-index wakes up from its protracted bearish nightmare will the current positive rally test further highs.

Since mid-September, the banking sub-index is moving in a ranged zone with a narrow gap of just 50 points. Its movement is restricted within 1,010 points, working as the sup­port, and 1,060 points, working as the resistance. Its inability to break the resistance at 1,060 paints a bleak picture for the bourse’s northbound movement. Still, its unwillingness to go below 1,010 points gives an opti­mistic view of the sub-index already testing its troughs. As long as this non-trending situation continues in the banking sub-index, the overall market will not get a clear direction.

On 23 July 2015, the new Gover­nor of Nepal Rastra Bank Chiranjibi Nepal unveiled his first monetary policy—announcing 300 percent increment in the minimum paid-up capital requirement for commercial banks. The same policy asked the development banks to raise their paid-up capital by 2,300 percent. The new policy required the com­mercial banks to raise their paid-up capital from Rs 2 billion to Rs 8 bil­lion. National-level development banks needed to raise it from Rs 640 million to Rs 2.5 billion. They were given two years to achieve this target. The underlying objective was to encourage them to go for mergers and acquisitions and reduce the number of commercial and devel­opment banks.

But as the majority of commercial banks were not in favor of mergers and acquisitions, only a few went for it. The majority decided to utilize the two years’ time to raise paid-up capital by issuing bonus and right shares. Promising net earnings of commercial banks coupled with the certainty of multiplication in the shareholdings encouraged people to invest in such scrip. The demand exceeded the supply and the bank­ing sub-index saw continued high­er-highs in its trading charts.

The dominance of the banking sub-index swayed the bourse in favorable territory and NEPSE saw a bullish run till August 2016. While the expectations of future return fuelled the Bull Run, the actual real­ization of the return in bonus and right issuance resulted in a glut in the market. Existing demand was unable to absorb the ever-increasing supply. In addition, the increasing supply started diluting the earn­ings. The blue-chip scrip of Standard Chartered Bank alone saw a decline in earnings per share from Rs 67.47 in Fiscal Year 2070/71 to Rs 31.15 in the Fiscal Year 2075/76. This is attributed to a massive increase in capital. Of course, all of these com­panies are working hard to maintain their previous earning levels but this requires time.

The second quarter of Fiscal Year 2076/77 is almost ending. Now, everyone is eagerly waiting to review the quarterly reports for signs of earning rebound. If the reports show better earnings compared to pre­vious fiscal, the investors will get more bullish. Each quarter report (of different banks) showing positive growth in net income (compared to the same quarter of previous year) will fuel interest to accumulate their stock. As soon as we see this in finan­cial reports, we can also witness breakouts at multiple resistance levels in the technical charts. In next one month, the mystery will start to unravel and people will have better information to take their positions.

Laxmi’s 19th AGM

Laxmi Bank held its 19th Annual General Meeting (AGM) in Kath­mandu this week. The AGM approved the pro­posal of distribution of 10 percent Bonus Shares and 5 percent Cash Dividend on the bank’s current paid up capital. With this, the paid up capital shall grow up to Rs 9.81 billion (after the distri­bution of bonus shares). The AGM discussed and approved the Directors’ Report and the Financial Statements for 2018/019 (2075/76), and rati­fied the appointment of direc­tors representing Promoter shareholders in the bank’s Board of Directors.

The bank closed the finan­cial year 2018/19 with a bal­ance sheet size of Rs 106 billion and net profit of Rs 1.59 billion. All key financial indicators are well within prudential and regulatory norms. The bank’s liquidity ratios remained well above the statutory requirement throughout FY 2018/19, reflecting the strength of its asset-liability management.

 NMB pre-approved education loan

NMB Bank has rejuvenated its Edu­cation Loan offering by introducing a series of attractive features among which prominent offerings include pre-approval facility, 100 percent financing with up to 15 years tenure, and up to 4 years mor­atorium period. The bank has made key additions with the objective of ensuring customers/students do not face financial hurdles in their aspiration to study abroad.

The bank will now finance up to 100 percent education cost, living and travel expenses. Further, to provide flexibility to students on sponsorship for abroad study, the bank has widened the scope of spon­sors covering both paternal and maternal grandparents, immediate in-laws, and uncles/aunts. Accordingly, the loan ten­ure has been increased to up to 15 years, whereas the criterion for moratorium period has been set at a low of four years or the entire course duration.

Hult Prize winners announced

The Hult Prize organizing committee in Nepal this week announced the winning team, which has advanced to the 11th annual Regional Summit in Vietnam. The “Pop-Pack” from King’s College won with their idea of revolutionizing the packaging industry of daily consumable items such as tooth­paste and shampoo. The winning team of BBA stu­dents includes Sachin Dangi, Rupesh Puri, Samaya Khadka, and Sushat Gaire.

The Regional Summit is happening all around the globe including in countries like Malaysia, Japan, London, the US, Mexico, Jordon, Nigeria, Philip­pines, and Pakistan.

The Hult Prize is a crowdsourcing platform for social good that was named one of the top five ideas changing the world by TIME Magazine. The innova­tive crowdsourcing platform identifies and launches disruptive and catalytic social ventures to solve the planet’s most pressing problems. This year, the Hult Prize’s focus is on ‘Empowering the Earth: Bold Business for a Better Planet’.

Laxmi’s ‘Viber-Stickers’

Laxmi Bank released its 16-set sticker pack on Viber with the objective of making mon­ey-talks more enjoyable in the Viber chat world. This was the first ‘Nepali animated sticker pack’ to be released on Viber.

Stickers are a fun, colorful way to express in Viber and “Greetings from Laxmi” defi­nitely does that, a press release issued by the bank reads. Laxmi Bank offers its valued customers products, services and tips that make a differ­ence in the everyday lives of individuals, families, small businesses or large corporates, the statement adds.

In the commercial vehicles seg­ment, Tata Motors is present in over 40 countries globally. Within them, Nepal is always among the first few in terms of importance, considering industry size and breadth of the portfolio that we have. Almost the entire portfolio available in India is available in Nepal too. All segments are cov­ered here.

Also, Sipradi has been a strong and dedicated partner of Tata Motors. The partnership has grown from strength to strength and on last count, I think we enjoy over 60 percent market share here. Nepal is a very important market for us.

How satisfied are you with the results here, in terms of sales, market presence and brand positioning?

First, if you see in terms of our market presence, I think we are in a good position. We are play­ing in every segment, which is satisfying. And if you look at Sip­radi’s network and presence, they have more than 129 outlets all over Nepal. Also the fact that we have a huge market share here is import­ant for us.

Personally, the most satisfying part is the relationships and bonds Sipradi’s services and Tata Motors’ products have developed with Nepali customers. We value that the most besides the huge market share. Our data suggests that in Nepal over 89 percent of the cus­tomers are highly satisfied with our products and services. We have customers who have been with Tata for all 37 years we’ve been in Nepal. We have third generations of Tata customers in Nepal. This is something that gives us immense satisfaction.

Do Nepal’s high import taxes and custom duties hamper sales of your high-end prod­ucts?

We do not normally comment on the policies of any government of any country. So long as there is a level playing field, we are okay. There are certain opportunities which come our way as a result of certain structures. And as I just mentioned, at the end of the day it is the customer who matters. So long as we can maintain that sense of value with the customers, the end result is seen in their new purchases and repeat purchases.

Apart from the taxation, what would you identify as your big­gest challenges in Nepal?

Every country has its own set of challenges. If you leave taxation out, there is always a question of how do we get closer to the cus­tomer. What does the customer really want? Understanding that on a repeat basis and also under­standing that the Nepali customer today is far more worldly wise and more exposed to international markets is a must for us.

We also have to consider the internet’s penetration in the coun­try. So the kinds of queries and questions we’d get 15/20 years ago, and what we get today, are very different. Our products and services have to be top-notch.

A new and educated generation is coming into business right now and their requirements and under­standing in terms of value creation is different. It’s a constant chal­lenge for us to process and absorb that information.