Market astrologers, Company vulnarability

Rajesh Sharma

I like to share 2 points.

1. Now, we could see several share market astrologers, who are busy predicting the NEPSE index for immediate future. They do not provide any supporting facts, data, credible logic or technical analysis. Simply they say the index will go down or up to xx figures such as 650, 700, 900, 950 etc. These predictions are simply their wishful thinking. Let's leave them happy and throw such predictions not supported by any technical analysis, into a dustbin.

2. In Nepali share market, we simply focus on operational factors including company's tangible performance. However, most of the time, looking at intangibles offers useful insights. Among such intangible factors, one is vulnerability assessment. The companies are many, particularly in banking sector that includes commercial banks, development banks, finance companies and micro finance companies. Many among them are either run by business houses or retire business/banking professionals/elites. We have only few public limited companies of real meaning of the phrase. We have good business houses and notorious business houses running the show. Similarly, we have companies that have no spinal chord, and if there is any, that is diseased.
For next year, if the situation does not change dramatically, we may see a good number of companies in red zone. The excessive or unsustainable bonus share or rights shares may increase their obligations and they may fail to meet share holders expectations. For this reason, we should see the vulnerability factors of any company before making investment for long time. Seeing anarchic environment in Nepal, this is absolutely necessary for the long term investors. Gone are the days when courage, luck and gut feelings were enough to make investment decisions.