Media and Market

Rajesh Sharma

Posted on November 24, 2015 on Small Investors Creative Ideas/NEPSE Discussion Forum/FB

A few journalists are working over time to magnify facts, manufacture rumors and sell this time roses and next time thorns according to the need and instructions of their pay masters. This is more true about EBL. For a long time, I have been following articles, news items and opinions in discussion forums of financial portals as well as social networking sites about EBL. My time and energy that I put following these media produces led me to the conclusion that they are highly motivated. The officials at the central bank also sound party to production of falsehood. They do not clarify and keep things in ambiguity so as to help creating panic among investors. Hence, I have made a conscious decision for myself that I will read stuff available but do not believe till I verify facts and evidences myself or read such facts, evidences and analysis by other friends who are trust worthy like Purusottam Raj Chimouriya ( Puru R. Chimouriya ) ji.

Nepse in auto pilot

Rajesh Sharma

Posted on November 22, 2015 in Nepse Discussion Forum/Small Investors Creative Ideas/FB

Now, NEPSE is in auto pilot. The command and control system is politics. Though the bad shape of economy will influence the market, but this would be a peripheral factor if investors see better prospects in future. Therefore, the auto pilot function has been blended with politics.

Not a good time for traders particularly. Investors could increase the number of shares if downward movement continues. Five things we could do now. 1. Sell and wait to increase the number of shares by buying a few days after. 2. Move from non promising company to promising companies by selling and buying as soon as possible. 3. Hold firmly and be ready to wait longer period of time - may be a year or more. 4. Sell and exit from the market, and 5. Finally, buy being selective and buy in small installments fully knowing the risk and opportunities.

Personally, I was buying in installments in moderation. After averaging a few times, I calculated now and all scrips are in loss. As a "never say die" optimist, I have decided to HOLD and may be add a few if my finances allow and the price is too tempting. If political situation turns to positive, I will be a winner. If it goes to further hostile territory, I may be in greater loss. But, this is how we go on - by stepping into zones of ambiguities and uncertainties.

Control over emotions

Rajesh Sharma

It is absolutely necessary to control over our emotions while making investment decisions particularly when the market is sliding down or galloping up. This is the time to test ourselves to know if we are mature enough or still are armature ones.

Political mess may end but economy is in too bad shape

Rajesh Sharma

Now, all parties involved in the political mess have been in big trouble. Hence, they will calm down though reluctantly. Some Development is possible. Hence, there are higher chances of some sort of compromise. 
In this scenario, the market may move up. But, the economy is in very bad shape. So, we need to be cautiously optimistic and have to invest in installments. Anyway, this is not the sell time.

DPs

Rajesh Sharma

My comment on Rhododendron Arboreum ji's post about DEMAT delay

Nearly all are like NIBL. May be, this is new phenomenon for them and they are lost somewhere. Being familiar with the system, technology and procedure could be fine, but the human factor is reluctant and unenthusiastic nearly in all DPs. Till then, they become responsive to costumer needs, let's do our work for them too. This sounds not a correct way of doing things but when entire country is in lethargic mode, why to expect good performance from these DPs? Self help was my favorite essay during school days and now I have opportunities to practice. Relax AB ji and help yourself till the country turns to active mode.

Is conversion of promoter shares too bad to market?

Rajesh Sharma

I read some negative comments about new Bafia Act's proposed provision of after 10 years of operation, promoters of a BFI could convert their promoter shares into ordinary shares . People were talking highly negatively when the percentage of promoter shares was brought down to 51%. Players played using fear as instrument of strategy that time.

This time also, they may repeat the same. The future is the combination of a dynamic change of time and space. The market would expand or shrink, politics will bring stability or will be further ruined, development will have a new tempo or would stagnate and many more will contribute for the scenario that of future. Therefore, let's see future in a dynamic realm and not as a static proposition. And, let not be terrorized by Bafia provision, which is mentioned above.

Is flood of Right shares healthy?

Rajesh Sharma

Once upon a time in distant past, around 2008/9, Mr. Kamal Gyawali was a hero. He was busy upgrading KMBF to Kist Bank. He was boasting that he will increase the paid up capital of his proposed bank to 5 billion. I was also impressed and bought KMBF shares. He offered rights shares many times. I collected quite a good number of shares. My average was around 550. I was dreaming a high dream. Kist got approval from NRB. I got Kist shares. I was happy. Gradually, Kist shares begun downward journey even before the avalanche that brought market down from 1175 to 290. I could not sense the avalanche but sensed the future of Kist shares and sold in much loss. But I was bit lucky selling it above 400.

Now, there is another Kamal Gyawali in the market. Its name is NRB. If it encourages meeting 8 Arab paid up capital by issuing rights shares, we will have many Kists in near future. Increasing capital without a plan for sustained growth is simply poisoning a BFI. Hence, I request NRB to discourage rights shares, allow bonus shares and encourage merger. Also, I advise investor friends to go for companies with a sustainable growth prospects.

For, traders, it is trend that makes sense for them and may not need to be overly calculative in regard to issues such as rights shares.

This is my perspective and we might have deference. I welcome and also respect differing views.

Rumor Marchants

Rajesh Sharma

We should not be surprised if we see an ad as described below because rumor merchants may go any lengths.

SCB shares on SALE @1999 with following attractions/free gifts for each transaction of 50 kittas:

1. Ten percent cash discount
2. One induction heater with Hawkins' KARAHI
3. One clay heater 1500 watt made in Bhaktapur
4. Five stevia baby plants
5. Yarsagumbu powder 200 mg
6. One kilo black beans
7. And finally, 20 liter patrol
Note: Scheme applicable till stock runs out.

Future scenario of Market

Rajesh Sharma

The market survived through a period of severe crisis. Hope among investors was the most important driver during this critical phase.

Now, the performance of economy and companies may influence the market and some ups and downs could be seen. But the overall environment could be helpful to retain or even enhance positive vibe.

The market has absorbed decreases brought by the book close factor. Bonus factor decreases got diluted and the overall index is shining.

I have some apprehensions too.

1. Commercial banks, development banks and finance companies will be in difficulty to maintain or improve their good performance of previous years due to bad shape of economy/industries/trades/services due to prolonged agitation/blockade. Hence, investors may loose patience resulting to stagnation in the index or even pulling index down.

2. Hydro power companies, particularly with projects in construction phase may face difficulties to complete projects on time which may result in lost opportunities and price escalation. Both, earthquake and agitation/blockade have made their performance affected.

3. Insurance companies' share prices have jumped 4 to 5 times in the last 2 years. This jump is more related to investor sentiment than on the performance of the companies in this sector. Due to probability of increase in paid up capital, the companies in this sector are still maintaining the attraction. However, it would not be possible to maintain the attraction with emotional/subjective factors for a long time. Moreover, if the capital would be increased and if the flood of rights shares would be there, the next year, we will have much less dividend.

4. The micro-finance companies have started to face ethical dilemma. The beneficiaries of MFIs are BFIs/insurance companies as they have invested in MFIs and reaping the bumper harvest due to the gap in margins in interest rates and upward movement of shares prices. Sikhar FPO allotment picture have made the picture of beneficiaries much clear. There is good probability that MFIs have to face regulatory streamlining on one side and not-so-happy clients on the other. This is too early to say something specifically, but there are some signs already that such scenario may influence their performance in coming years.

Hence, the future scenario is complex - improved external environment but challenges at micro level/company level. Therefore, my expectation is that the market will not face storms, and so will not slide significantly down, but will not be on the bed of roses, and so will not gallop. It will move up relatively slowly and gradually facing some downs in between. Such slow upward trend will continue till the start of next dividend season.

Mega merger - NCCB, Kumar +

Rajesh Sharma

I read some not so encouraging comments about the merger between Kumari, NCCB and other four. The primary reasons are that from now on there will not be possibility for bonus/rights shares and the money will be blocked for several months due to merger. In a heavily traders dominated market like NEPSE, these concerns are quite reasonable. Also, when the merger completes, one effective strategy that of rumor will have less influence as it is effective in a platform that of bonus/rights shares. I have full sympathy with trader friends.And, also I have soft corner towards rumor merchants as they provide entertainment free of charge.

For investors, it is healthy to have a strong company to have their investment. They have fairly ready business area and clients coverage. Their problem will be bringing together conflicting management practices, company cultures, business modules and streamlining them as chemical compound. This is a big challenge. Globle IME has been fairly successful and the new entity (may be KCCB?) could learn from their experience. Investors are primarily interested in reasonably safe investment and satisfactory dividend. And, a merged entity could make this possible from the very beginning as that will have amalgamation of existing capital, clients, infrastructure, goodwill and enhanced image.

All the best to a new chemical compound and the owners of that entity - the shareholders of the six companies.
Disclosure: I have no shares of any of the six companies and had none in the past too

Some characteristics of a good number of instant contributors in discussion forums

Rajesh Sharma

Some characteristics of a good number of instant contributors in discussion forums:
- Worried about others' losses, so advise free of cost to buy profitable shares only.
- Sense through smell which company provides what percentage of dividend/rights share.
- Know much in advance which company is merging with which company and what would be the swap ratios.
- Magnify easily ant into elephant positively or negatively, if and when they need to do so.
- Read headlines in newspapers related to share market and pick up a few headlines of their interest and blow the issues up to make a certain company in red or green.
- Compelled by their nature full of philanthropic essence, provide instant advice 24 hour, seven days a week.
I appreciate their energy, efficiency, attitude and willingness. However, the priest is interested about the Daxina and the host/departed soul will go to heaven or hell according to his/her Karma/deeds.