Kathmandu, February 17

Nepal Stock Exchange (Nepse), which had started retreating following the lifting of the border blockade, witnessed a buying spree today, prompting the benchmark index to hit a fresh all-time high of 1,266.08 points.

The index, which opened at 1,257.34 points, advanced by 8.74 points, or 0.7 per cent, as demand for shares of banks, financial institutions and insurance companies went up.

“Investors are grabbing shares of financial sector companies, as most of these firms have come up with impressive balance sheets in the second quarter,” Stockbroker Anjan Poudel said.

During today’s trading, banking sub-index gained 8.97 points, or 0.78 per cent, to end at 1,156.10 points. Most of the heavyweights of the banking sector, such as Nabil Bank, Standard Chartered Bank Nepal, Nepal Investment Bank, Everest Bank and Himalayan Bank, saw moderate hike in their share prices.

Insurance sub-index, on the other hand, jumped 28.16 points, or 0.51 per cent, and closed at 5,567.44 points.

“Demand for insurance stocks is still pretty high because of rumours that the insurance sector regulator will soon instruct insurers to raise their paid-up capital. Such a ruling will compel most of the insurance companies to issue more bonus and rights shares,” Poudel said.

Although the investor confidence was high today, hydro sub-index ended the day in the red territory.

“Selling pressure is mounting on shares of hydropower companies because of allure created by stocks of the financial sector. Also, fuel supply situation has not fully normalised, despite lifting of the blockade, which is being seen as a deterrent,” Poudel said.

Except this hiccup, all other sub-indices booked gains today.

“Investors are thronging the stock market because there are not many investment avenues in the country,” Poudel said. “Also, falling deposit and lending rates have worked as incentives for investors.”

Normal savings deposit rates at many commercial banks now hover around one per cent. Considering inflation of 11.6 per cent, depositors, in real terms, are losing money by parking funds at banks.

“So, some of these depositors are also buying stocks,” Poudel said.

But even those who do not have cash in hand are getting drawn towards the stock market because credit is becoming cheaper with the fall in lending rates.

“What’s more, many financial institutions that previously showed reluctance to extend credit against security of dematerialised shares have started offering loans against the electronic stocks. So, easy availability of credit is also attracting investors towards the stock market,” Poudel said.