KATHMANDU, JULY 30
The new Monetary Policy, a slight improvement in liquidity and entry of new investors in the market resulted in the Nepal Stock Exchange (Nepse) index surging by 123.06 points or 6.10 per cent over the review week from July 24 to 29.
Kumar Keshar Bista, a financial analyst and adviser, said that the new Monetary Policy has allowed an individual to take a loan of Rs 120 million from a single bank or financial institution which has halted panic-selling among shareholders.
"Earlier, an individual could not borrow more than Rs 40 million from a single bank.
Scrapping of that provision played a crucial role in the gain witnessed at the secondary market," he said.
According to him, the market is now witnessing an average daily turnover of over three billion rupees, which is an indicator of improvement in liquidity.
"A positive outlook for the liquidity situation could also be the reason for the market's improvement at the moment," Bista added. He also shared that the restriction on issuance of LCs for the import of luxury items by the Nepal Rastra Bank (NRB) may have resulted in the addition of new investors in the market, thereby resulting in an improvement of the market in recent days.
Bista also opined that the market could see gradual recovery over the next few weeks, with the benchmark index possibly reaching around 2,400 points by mid-August.
The sensitive index, which measures the performance of class 'A' stocks, increased by 6.02 per cent or 23.24 points to 409.48 points in the review period.
However, the float index that gauges performances of shares actually traded followed the downward trend by dropping 2.76 per cent to 135.67 points.
Altogether 49.68 million shares were traded during the trading week through 325,370 transactions that amounted to Rs 20.87 billion. The weekly turnover was more than 116 per cent higher than the previous week when 23.26 million shares had changed hands through 167,754 transactions that totalled Rs 9.66 billion.
The average daily turnover in the past week was Rs 1.61 billion and it increased to Rs 3.47 billion this week.
The benchmark index had opened at 2,017.46 points on Sunday and rose by 61.05 points to close at 2,078.51 points for the day. The market gained 54.45 points on Monday to close at 2,132.96 points before witnessing a correction on Tuesday by falling 44.80 points to 2,088.16 points. On Wednesday, the benchmark index gained 23.83 points to 2,111.71 points and rose by 15.49 points to 2,127.48 points on Thursday.
The secondary market further advanced by 13.04 points on Friday to settle the trading week at 2,140.52 points.
All the subgroups landed in the green during the week, led by the finance sub-index, which surged by 21.96 per cent to 1,989.99 points. The development banks subgroup advanced by 17.27 per cent to 4,073.65 points. The hydropower subgroup gained 10.58 per cent to 2,540.51 points, hotel and tourism rose by 10.30 per cent to 2,966.45 points, microfinance went up by 10.02 per cent to 4,934.80 points.
Meanwhile, investment advanced by 8.10 per cent to 70.76 points, others by 7.99 per cent to 1,617.04 points, trading by 4.82 per cent to 2,077.83 points.
Manufacturing and processing rose by 4.01 per cent to 5,381.40 points, life insurance went up by 3.27 per cent to 9,926.52 points and non-life insurance edged up by 2.10 per cent to 8290.26 points. Banking, the subgroup with the highest weightage on the market capitalisation, rose by 1.83 per cent to 1,392.28 points, while mutual funds edged up by 0.48 per cent to 14.79 points.
A version of this article appears in the print on July 31, 2022, of The Himalayan Times.
