The first four months have been good for investors in the stock market with the Nepse gaining 90 points over the period. The index crossed the 600-point mark for the first time in four years.
The secondary market opened at 509.36 points on July 16, the first day of fiscal 2013-14 and closed at 600.28 points on Nov 14, the last trading day of the first four months.
Earlier, the Nepse had climbed to 599.22 points on Oct 26, 2009. After that, it was downhill all the way for the secondary market until its recent recovery. The market reached an all-time high of 1175.38 points on March 31, 2008.
The upward movement of the last two years continued in this fiscal too, but positive political developments as well as good financial performance by banks and financial institutions, that dominate the stock market, also played a role in the Nepse’s rise in the last four months, said stock analysts.
They added that a drop in bank interest rates as a result of excess liquidity and slowed demand for loans from other sectors also allowed stock investors to get financing from banks more easily which helped increase their investment in the stock market.
“Due to increased liquidity, most banks have reduced the interest rate on loans for buying shares to 12-13 percent from 16-17 percent,” said Narendra Raj Sijapati, president of the Nepal Stockbrokers’ Association.
The current upward swing in the Nepse is similar to its rising trend during the first four months of the last fiscal year 2012-13.
A study of the figures shows that the stock market experienced a similar rate of growth last year. The index surged to 480.85 points from 384.89 points over the review period in 2012-13. In fact, the stock market has been rising for the last two years after plunging to a low of 292.31 points on June 15, 2011.
With other sectors like industry and real estate losing their charm for investors, the stock market has emerged as an attractive investment opportunity.
The stock market swelled over the last one and a half years also because investors turned away from the commodities market amid reports about cheating.
Sijapati said that the move to hold fresh elections to the Constituent Assembly (CA) played a key role in encouraging investors to put their money in stocks in the last four months.
The stock market has yielded good returns to investors as market capitalization witnessed a rise of 75.2 percent to Rs 609.25 billion. Market capitalization means the market value of all the shares listed on the secondary market. A rise in the value of all the shares over the review period contributed to the massive rise in market capitalization.
During the last four months, the market witnessed a turnover of Rs 11.50 billion. The capital market started to grow impressively with the end of Tihar. Just a week before the CA polls, the market surged 20 points.
Almost all the trading groups saw their indices rise during the period. The Insurance Companies’ index gained a whopping 581.48 points to close at more than 1523 points.
Sijapati said the impressive growth in the Insurance Companies’ index was due to the move of the companies to increase their paid-up capital by issuing a large amount of bonus shares.
The Insurance Board has ordered life insurance companies and non-life insurance companies to increase their paid-up capital to Rs 500 million and Rs 250 million respectively.
Meanwhile, Hydropower Companies took the second place in the list of gainers by reaching 333.97 points. “The good returns provided by a number of hydropower companies like Chilime helped the sub-index to surge forward,” Sijapati said.
Source: ekantipur, 19 Nov 2013
The secondary market opened at 509.36 points on July 16, the first day of fiscal 2013-14 and closed at 600.28 points on Nov 14, the last trading day of the first four months.
Earlier, the Nepse had climbed to 599.22 points on Oct 26, 2009. After that, it was downhill all the way for the secondary market until its recent recovery. The market reached an all-time high of 1175.38 points on March 31, 2008.
The upward movement of the last two years continued in this fiscal too, but positive political developments as well as good financial performance by banks and financial institutions, that dominate the stock market, also played a role in the Nepse’s rise in the last four months, said stock analysts.
They added that a drop in bank interest rates as a result of excess liquidity and slowed demand for loans from other sectors also allowed stock investors to get financing from banks more easily which helped increase their investment in the stock market.
“Due to increased liquidity, most banks have reduced the interest rate on loans for buying shares to 12-13 percent from 16-17 percent,” said Narendra Raj Sijapati, president of the Nepal Stockbrokers’ Association.
The current upward swing in the Nepse is similar to its rising trend during the first four months of the last fiscal year 2012-13.
A study of the figures shows that the stock market experienced a similar rate of growth last year. The index surged to 480.85 points from 384.89 points over the review period in 2012-13. In fact, the stock market has been rising for the last two years after plunging to a low of 292.31 points on June 15, 2011.
With other sectors like industry and real estate losing their charm for investors, the stock market has emerged as an attractive investment opportunity.
The stock market swelled over the last one and a half years also because investors turned away from the commodities market amid reports about cheating.
Sijapati said that the move to hold fresh elections to the Constituent Assembly (CA) played a key role in encouraging investors to put their money in stocks in the last four months.
The stock market has yielded good returns to investors as market capitalization witnessed a rise of 75.2 percent to Rs 609.25 billion. Market capitalization means the market value of all the shares listed on the secondary market. A rise in the value of all the shares over the review period contributed to the massive rise in market capitalization.
During the last four months, the market witnessed a turnover of Rs 11.50 billion. The capital market started to grow impressively with the end of Tihar. Just a week before the CA polls, the market surged 20 points.
Almost all the trading groups saw their indices rise during the period. The Insurance Companies’ index gained a whopping 581.48 points to close at more than 1523 points.
Sijapati said the impressive growth in the Insurance Companies’ index was due to the move of the companies to increase their paid-up capital by issuing a large amount of bonus shares.
The Insurance Board has ordered life insurance companies and non-life insurance companies to increase their paid-up capital to Rs 500 million and Rs 250 million respectively.
Meanwhile, Hydropower Companies took the second place in the list of gainers by reaching 333.97 points. “The good returns provided by a number of hydropower companies like Chilime helped the sub-index to surge forward,” Sijapati said.
Source: ekantipur, 19 Nov 2013
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