Submit your Article

The way has been paved for the Nepal Stock Exchange (Nepse) to initiate the operation of the ‘Nepse 30’ index. The Nepse board meeting on Monday endorsed the procedures formulated for the launch of the ‘Nepse 30’.

Murahari Parajuli, a spokesperson for the Nepse, commented, “The board of directors meeting on Monday approved the Internal Procedures for the Development, Operation, and Management of the Nepal Stock Exchange Limited Index, 2080.”

Following the approval of the procedure, the board meeting also made the decision to establish a committee responsible for implementing it. Nepse has stated that this procedure will serve as a guiding framework for the operation and management of a variety of indices, both presently in operation and planned for the future.

The implementation committee will advance the preparations and oversee the operational and managerial aspects of the ‘Nepse 30’ index. Furthermore, it will propose a specific date for the commencement of the ‘Nepse 30’ index’s operations.

Having received approval for the procedure, Nepse is now in high gear to introduce the new stock trading index, ‘Nepse 30’, in less than a month. The ‘Nepse 30’ could be up and running as early as the first week of October, said officials.

Currently, the ‘Nepse 30’ index is undergoing internal testing. This testing phase, initiated on July 25, has confirmed the feasibility of operating the ‘Nepse 30’ index.

Nepse envisions the ‘Nepse 30’ as an index formed by tracking the share trading activity of 30 carefully chosen companies. This new index will consist of the leading 30 companies that meet the specific criteria established by Nepse from among all the companies listed on its platform.

It is important to note that ‘Nepse 30’ will not be an independent index. Currently, Nepse comprises 13 sub-indices, including sensitive, float, and sensitive float indices. Nepse’s plan involves the inclusion of companies from six distinct sectors, such as banks and financial institutions, microfinance, insurance, hydropower, manufacturing, and trade and services, within the ‘Nepse 30’ index. Each sector will be represented by at least one company and may have a maximum of eight companies included in the index.

To be eligible for inclusion in the ‘Nepse 30’, companies must meet specific requirements, such as demonstrating profitability over the previous three years, maintaining earnings per share (EPS) exceeding 10 percent of their paid-up capital, surpassing the inflation rate with their EPS, and additionally, having allocated a minimum of 25 percent of their shares to the public while boasting a shareholder base of no less than 20,000 individuals.

Likewise, companies must exhibit a daily turnover averaging at least 2.5m over the preceding six months and engage in daily share trading of no less than 5,000 units.

Nepse has announced its intention to introduce the ‘Nepse 30’ with the objective of enhancing the development, operation, and management of indices in order to bolster activity within the secondary market.

The ‘Nepse 30’ index will be structured as a market capitalization-based index, incorporating immediately tradable (free float) shares.

Previously, Nepse had plans for the ‘Nepse 50’ index, but it opted for the ‘Nepse 30’, citing potential challenges associated with managing 50 companies.

The procedure outlines specific criteria for categorizing companies selected for the development of the new index based on their minimum paid-up capital. In accordance with these criteria, companies with a paid-up capital of Rs 5bn will fall into the A category, while companies with a paid-up capital of Rs 3bn will be categorized as B class.

With Prime Minister Pushpa Kamal Dahal’s intervention, the issue of dedicated feeders has been resolved at least for now.  The issue resurfaced when, on Aug 17, the Nepal Electricity Authority (NEA) warned industrial and commercial customers that their power connections would be disconnected unless they settled their outstanding payments within a 15-day period.

The delegation of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) led by its President Chandra Prasad Dhakal met the Prime Minister on Monday. During the meeting, the FNCCI delegation briefed the Prime Minister that the decision to cut off electricity when the economy is in trouble due to economic recession will bring more crises.

Following a request from the FNCCI, Prime Minister Dahal contacted Kulman Ghising, the managing director of the authority, and directed him to halt ongoing proceedings. The Prime Minister assured the FNCCI team that the decision to cut off electricity by the NEA will not be implemented for now. “The government will address the issue in coordination and consultation and a study about it is underway,” said Dahal.

Given that businesses are currently operating at less than 40 percent capacity due to the ongoing economic crisis, the FNCCI suggested that specific actions are needed to safeguard industrial enterprises. FNCCI President Dhakal remarked that the NEA's actions were unjustifiable given the current state of the private sector. “At this juncture, what we require is assistance and encouragement—let’s not compound our challenges,” he said.  After the fresh notice by the NEA to settle the outstanding payments, the FNCCI convened the meeting of its ‘standing committee’ on Sunday, in which industrialists from the Bhairahawa Industrial Corridor were also present. The majority of industries that are yet to settle their dues to NEA belong to the cement and steel industries. On Monday, cement and steel industrialists also accompanied FNCCI President Dhakal to meet the Prime Minister.

While payment disputes between the NEA and the private sector have been lingering for years, the NEA issued a fresh notice after lawmakers raised the issues at the parliament demanding the suspension of its Managing Director Kulman Ghising for failure to recover the outstanding bills.  The row between the NEA and industrialists over outstanding electricity bills has been dragging on for years. The state-owned utility maintains that 62 industries owe more than Rs 19.95bn for electricity supplied to them through dedicated feeders and trunk lines since 2015.

When the country was experiencing an extreme power crisis, a board meeting of the NEA, in June 2015 set premium charges for factories using electricity through dedicated feeders from August of that year. A separate meeting of the now-dissolved Electricity Tariff Fixation Commission had decided in Jan 2016 to set premium charges for factories using direct electricity from dedicated feeders and trunk lines. The dispute intensified after May 2020, after the power utility presented bills to the factories for overdue payments.

In the second week of Aug 2020, a cabinet meeting even waived the premium charge for eight and a half months of the total dues in order to minimize excess financial burden on the industrialists. With the decision, the industrialists were supposed to settle the dues of only 28 months and 11 days. However, the industrialists have been arguing that it was not appropriate for the NEA to levy additional fees even after the power utility announced the end of load-shedding in 2016.

In April 2021, the Parliamentary Public Accounts Committee (PAC) had directed the government to recover the dues from the industries that used electricity supplied through dedicated feeders and trunk lines after NEA failed to take action against them. The industries had filed 51 writs in various courts against the NEA over the dedicated feeder issue. While the courts dismissed 49 of these petitions, interim orders were issued for the remaining two cases involving Shivam and Maruti Cement. In the rulings favoring these two companies, it was stipulated that power supply should not be disconnected. Since the court scrapped 49 out of 51 writs, the NEA has been emboldened to pursue the collection of outstanding dues.

The Nepal Stock Exchange (NEPSE) plunged by 19. 42 points to close at 1,967.57 points on Tuesday.

Similarly, the sensitive index dropped by 2. 50 points to close at 379. 14 points.

A total of 3,916,161-unit shares of 276 companies were traded for Rs 1. 13 billion.

Meanwhile, Shuvam Power Limited was the top gainer today with its price surging by 9. 99 percent. Likewise, Three Star Hydropower Limited was the top loser as its price dropped by 10. 00 percent.

At the end of the day, the total market capitalization stood at Rs 2. 94 trillion.

The gold is being traded at Rs 112, 000 per tola in the domestic market on Tuesday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, tejabi gold is being traded at Rs 111, 450 per tola.

Similarly, the silver is being traded at Rs 1,405 per tola today.