Nepali market - Some syndicates and some trading houses

Rajesh Sharma

In developed markets, factors like big or small players, syndicates and trading houses etc, may be considered as peripherals as demand and supply rule the market. But, in underdeveloped markets like ours; rumors, manipulations,   covert operations like wrongly using BT platform, overt interventions like willfully introduced ambiguous policies by the regulators, etc play vital roles. 

Hence, I thought to share what impression I have about BIG Players in the market.

There are three major syndicates and three major trading houses operating in the share market in Nepal now.

Syndicate 1 - NRB officials/finance ministry officials including former officials of both. They issue directives targeting the market. Often, the directives have mouths in both sides. There is enough room for misinterpretation. Present 5% provisioning directive is one such thing. They use this modus operandi to get richer in no times by buying and selling shares in the name of many relatives/friends.

Syndicate 2 - Officials of SEBON/NEPSE/CDS. They simply obstruct the process of bringing transparency in the market. They may or may not be directly involved in buying or selling shares, but they get wealth accumulated through this modus operandi of obstruction/acceleration. Delay in implementation of CDS is an example.

Syndicate 3 - A few brokers have been accumulating wealth through a well thought out strategy. Primarily, they do this by utilizing the system of BT for their vested interest.

Trading House 1 - Pradhan, Shrestha and another Pradhan are in this trading house. Manufacturing rumors, packaging them well and marketing rumors as truth are their way of doing things. The group attacks a company as SALAHA, partly controls it, does cosmetic surgery and sells at unbelievable price.

Trading House 2 - T'wala trading house has a bit ethical strategy. It tries to influence the management and harvests benefits in a comparatively business like manner. However, this trading house also utilizes rumors spread by other trading houses. The worst thing this trading house does is that it influences Syndicate 1 and 2 and shares benefits with them by reaping bumper harvest through introduction of ambiguous policies.

Trading House 3 - This Shrestha, Shrestha and Shrestha trading house is naked, openly corrupt and does anything at its disposal to grab, snatch and rob money. This infamous trading house needs no further explaining.

Moreover, the political crooks provide fodder to above mentioned syndicates and trading houses. And, the syndicates and trading houses chew that fodder tastefully. Hence, this factor also needs to align with rumor mill when looking at, analyzing and understanding the market

Hence, we small investors need to develop information network, should expand knowledge base and  have to insert courage within ourselves so as to smell, analyze and understand what is happening in the market and strategize our behavior accordingly.

I believe we should develop capacities to survive and flourish in an environment, which is hostile. That is absolutely possible.

Market going down again

Rajesh Sharma

The market has gone down by 11 and half points today. The down turn is continuing. The volume is also not so impressive. Why so and what we could do?

Investor psychology is governed by fear. The reasons could be many. Among them, I have listed below a few:

1. Fear due to Nakkali Share certificate factor. Particularly, it has influenced in decrease of demand.

2. Selling pressure due to desire to clear shares in BT. IT has increased the supply.

3. Political pendulum moving fast in either direction heralding longer time for fluid situation. The agitation factor creating some type of nervousness.

4. Some brokers are out of business for quite sometime and their clients are in wait and see situation creating defensive environment.

Moreover, also there is, in general, a seasonal effect as this is a dull period historically. The dividend season is over and declaration time is quite far away.

Who is on fire? Certainly the small traders. Those who could not hold or do not dare to increase either money or number of shares will suffer most. Every major down turn throws a few traders out of business. This is too bad but a reality.

For long term investors, there is always another day, another time. They could bear the loss in paper and could wait. This is neither financial crisis at macro level nor a company's collapse at micro level. Economy is performing okay and a large majority of the companies are performing well. Hence, the turn around is certain.

There are three probable options.

1. Hold if you are investors and turn to be investors, if you are traders and again hold.

2. We never know what happens next. Simply we could do probability assessment and take decisions accordingly. If we really believe that turn around is certain, to earn more, movement is necessary. Therefore, we could invest today or even sell part of our shares right now and keep cash ready to buy more number of shares some days down the line anticipating that for some time bear would rule the market. Holders are relatively safe but are not better than risk taking/entrepreneurial investors or skilled/ courageous traders.

3. Continue to be fearful, be restless, carried away by rumors and pray for peace of mind as well as for safety of your investment.

The third option is not at all for people, who are in business that takes place in share market.

We should devise strategies and develop skills necessary to earn in both types of market situations - bull and bear. How that could be done is altogether different to different individuals and, thus, their performance is different. Now, social Darwinism is in full play. Only fittest could survive and even flourish. We are in a hostile terrain, let's acknowledge this fact and proceed ahead.

If we really believe that we lack that extra courage, temperament, skill and attitude, let's use the reverse gear, leave the share market and do something suitable to our attitude, skill and temperament. Peace of mind and harmony between our temperament and area of actions are more important than being in certain occupational stereotypes. This advice is not for our friends, who are silent/passive small investors for years, who applied in IPO, got some shares and are keeping that in their boxes. This advice is for active investors/traders.

We could not control or even influence the political course. Hence, we have to operate in an given political environment.

The surprising factor here is the role and actions of the regulators of the share market. They are doing nothing in implementing CDS, which could rectify many wrongdoings in the market. Here, the investor community in general, and the Investors Forums in particular, could play a role. Therefore, through this note, I request friends in the Investors Forums to take lead role in clearing the mess from the market by pressurizing the regulating authorities to implement CDS.

Like · 

• Madhav Pathak, Utsab Shrestha, Aarjan Baskota and 19 others like this.
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  Prashim Shakya Effect of IPO as well

  March 16 at 4:45pm · Unlike · 2
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  Rajendra Bhattarai how long does this bear trend go? any idea

  March 16 at 5:02pm · Like
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  Prashim Shakya Depends upon mentality of investors

  March 16 at 5:04pm · Like
• 

  Rajendra Bhattarai i think bholi second hour ma jharna rokincha hola

  March 16 at 5:07pm · Like
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  Rajesh Sharma There is no bear phase in our market as such. This is simply a correction. Invetopedia defines bear market as, "A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustai...See More

  

  Bear Market Definition | Investopedia

  A market condition in which the prices of securities are falling, and widespread pessimism causes the...

  INVESTOPEDIA.COM|BY ROOT

  March 16 at 5:13pm · Like · 1 · Remove Preview
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  Rajesh Sharma As long as Rajendra ji's question regarding how long the market will be in correction mode, I think here are three factors - 1. criminal acts in the market such as Nakkali share certificates and its impact seen in fear, 2. volatile political environmen...See More

  March 16 at 5:20pm · Like · 1
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  Santosh Raj Bajgain Bear trend comes when the companies starts to decrease their profit,interest rates starts to increase(person finds more returns in bank than stock),there are more oppurtunites or investing feild,national economy starts to plump,communist favoured government...from any angles i cant feel a bear trend.(personal analysis)

  March 16 at 7:14pm · Like · 1
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  Rajendra Pradhanang I agree bearish trend is an overall effect of the economy as a whole. The increase in bank interest rates mean people start to deposit their savings in a bank rather than in stocks..Bank will face lack of liquidity..

  March 16 at 7:21pm · Like
• 

  Suraj Lal Amatya i think it's a starting phase of bearish trend; there is slightly increase in interest and economy is also not good as we predicted...sentiments are not favourable

BT is a platform for manupulation

Rajesh Sharma

Many friends have asked about risk in BT. Long time ago, I had a brief comment stating that "BT is a cancer of Nepali share market." This is the platform where several orchestras have been staged /organized. The mother of many manipulations is BT. Beside playing with our money for around 10 days, the following are other risk factors in BT.
Below, I have copied and pasted my answer to a friend.
1. "Tapaiko share becheko huna sakchha. 2. Tapaiko shareko certificate nakkali huna sakchha, 3. Tapaiko share rokka bhayeko hunasakchha.
2. Ahile BT kai karan le pani CDS lagu huna sakeko chhaina. Charwata brokerko kamko chhanbin hudai chha. NB group sanga sambadhdha companyko pani sandehko abastha chha. nagarik lagani kosh le kati shareko namsari gareko chhaina. Karan thaha chhaina.
3. Yi sabai kharab sambhawana bata inschinta hune tarika bechne wa namsari garne nai ho.
4. Tyasaile safe side ma basnu ramro. Broker sanga tapaiko kati biswas chha, tesle pani kehi pharak parchha. Broker mathi purai bharosa chha bhane BT mai rakhnu bhaye pani hunchha."

Hence, it would be wise to revalidate the BT document physically. If it is sold by NB Group affiliates, Pradhan Group affiliates, NB Group companies, Pradhan Group companies, splinted share documents (part of shares of original share certificate sold by using another slip/paper), and so on, please verify with the Right to Share (RTS) of that company, if you like to continue to hold in BT. Ask for both, authenticity of the document and if that has been in Rokka (collateral against loan/ held to sell as per court/Nepse/SEBON order) or not. Otherwise, selling or transferring ownership are better options.
Let's try to dig out further but we should not be in panic mode. This should be for reassurance/reconfirmation not for panicking. Better sense should prevail upon us.

Villains in Nepali share market

Rajesh Sharma

It is surprising to see political villains around share market in Nepal. The most influential role of a villain was played by BBR when he compared share market with gambling den (Juwa Ghar). Being afraid of such comparison, many investors did Harakiri (conscious suicide). After that, another villain appeared in the form of YRK (Governor of NRB). He did everything at his disposal to pull the market down. Even Dr. Dari sir (Finance Minister) was helpless to rectify something bad to help share market. And, came the turn of PKD. Making constitution drafting process difficult and throwing Andolan (agitation) as his weapon to do this, he terrorized many vulnerable small investors. Now, KPO has turned to a new villain, who could obstruct the process of constitution writing as his ambition to grab the chair of PM sounds derailed.

Hence, in Nepali share market, political villains have always been present since formation of PKD government. And, those villains are blocking the course of growth for a long time. Still, market is not only surviving but a bit growing too, which is good to note.