Kathmandu, December 8:
Nepali capital market is virtually on fire, as the Nepse has in a weekâ€™s trading recorded a highest ever growth of 70.37 points and almost touched 1000 points mark this week.
Led by Development banks (a surge by 198.09 points), Finance companies (by 76.15 points) and Commercial banks group (by 74.67 poin-ts), the Nepal Stock Exchange (Nepse) index posted 70.37 points this week to register 992.81 points at the closing.
Last week, Nepse closed at 897.29 points. But on Sunday, it posted 922.44 points, on Monday 942.99 points, on Tuesday 963.79 points, on Wednesday 974.41 points and on Thursday, the last day of the trading, it closed at 992.81 points. The growth pattern proves that a group of investors, with a deep pocket, is exploiting the market and controlling the price.
â€œNext week, Nepse might touch 1,100 points,â€ said one of the biggest investors, without wanting to be named, adding that the transaction of Standard Chartered Bankâ€™s shares will push the Nepse to almost 50 points up and other financial institutions will push the market by 50 points to make it 1,100 points.
After book close, Standard Chartered Bank has not seen any transactions of its shares.
However, given the size of Nepalâ€™s economy and real sectorâ€™s involvement in the capital market, the growth does not support market fundamentals. â€œOpen secret of the capital plan of all the commercial banks, development banks and financial institutions have fuelled the capital market,â€ he added.
Nepse and Securities Board of Nepal have repeatedly warned the investors to go through performance of any institutions, before buying their shares. â€œDo not believe in rumours, market crash will leave all the small investors in cold,â€ Nepse has warned.
â€œBut the investors are after the bonus shares and rights shares,â€ he said. He claims that the market will not crash rather will boom but the market fundamentals do not support the current boom and his argument, both.
â€œItâ€™s high time that a regulation be brought to check the source of money flowing in the capital market,â€ said one banker, adding that promoters have to show tax clearance. â€œSimilarly, the large investors must show tax clearance certificate before buying shares in bulk in secondary market,â€ he suggested.