Stock market hits 27-month high

The NEPSE index has increased by around 400 points in the last two weeks. Even though the market showed signs of growth for a month, it could not catch up. But in the last 14 trading days, NEPSE increased by 400 points and reached 2,424.32 points by Thursday.

This growth of the stock market has been analyzed in connection with the new government. Especially after the agreement between UML Chairman and Prime Minister KP Sharma Oli and Congress Chairman Sher Bahadur Deuba on forming a new alliance on the night of last June 17, the analysis seems to be correct.

Technically, the analysis is not 100 percent correct. But fundamentally, there is no room for denial. Because NEPSE, which was at 2,53.38 points on June 17 (the day of agreement between Congress and UML), has reached more than 2,400 by Thursday. Out of 14 trading days during this period, NEPSE decreased on two days and increased on 12 days.

NEPSE decreased by 22 points in two days, NEPSE increased by 408 points in 12 days. During that period, NEPSE has increased by single digit only on one day while the remaining 11 days have double digit growth. On an average, Neps has risen by more than 60 points in the last four trading days. This is why this increase in the stock market is linked to the arrival of the new government, experts say.

Experts argue that the continuous rise in the stock market with the rumor that UML and Congress will form a new government and Vishnu Poudel will become the finance minister is just a coincidence. Because since the new government came, there has been no policy related to the market nor has it been addressed. "The interest rate had already fallen, as there was enough liquidity, the banks had to give loans to investors by mail. However, the investor's confidence did not increase," the source said, "now the new government on the one hand and the Rastra Bank on the other hand have sent a positive message to the market." However, the source claims that there is no reliable reason for the market to grow sustainably.

Deputy Prime Minister and Finance Minister Vishnu Paudel claims that investors are excited because the government wants to promote the stock market in a balanced and dignified manner, listen to and solve the problems of the market. We want to present a balanced and accurate view of the stock market. This is the reason why the stock market seems to believe us," he said. "There is a positive effect on the market because the investors believe that they will not make mistakes and proceed with the right kind of policy. We have taken this as the citizens' trust towards the government.'

At present, more than 6.3 million people are directly involved in the stock market, so he claims that the government is clear about the need for balanced development of this sector. Some were also heard to analyze that the stock market is a gambling house. It gave a kind of negative message. But this government does not have unbalanced practices, unbalanced analysis, unbalanced approach towards shares,'' he says, 'We believe that the stock market should be promoted in a mature manner. Such are our thoughts and policies. We want to move the stock market in a balanced manner. We want to say that the investment of investors should not sink.' He claims that they have found that investors are assured with this thinking and analysis adopted by the government because they want to facilitate in that way.

Earlier on August 2, 078, the NEPSE index was at its highest point (3 thousand 199). NEPSE's previous high was 072 on July 12. At that time, when the NEPSE index reached 1 thousand 881 points, the total market capitalization reached 20 trillion 70 billion 99 billion rupees. Since then, the declining market rebounded and on August 2, 2018, both the NEPSE index and market capitalization reached new highs, setting new records. Neeraj Giri, the former executive director of Nepal Securities Board, said that since there has been an increase in the stock market for no reason in the last few days, it should be restrained.

There was no reason for the stock market to rise so much in the last couple of weeks. During this period, the share price of companies whose financial condition is not good has increased without any basis,' he said, 'Therefore, I urge investors to make investment decisions only after analyzing the basic and technical aspects of the company without following rumors.'

If you look at the situation of the company whose share price will increase, it is clear that the risk has increased because the share price of the company with negative net worth has gone up a lot. It's not bad to have a market that hasn't been growing for a long time. But in such a situation, the possibility of manipulation is also high, he said, so the investors should be restrained and make investment decisions.

On Thursday, the share price of a total of 144 companies increased while the price of 95 companies decreased. The prices of the remaining 4 companies remained stable. A total of 3 crore 99 lakh 38 thousand 237 shares were bought and sold. Shares worth 15 billion 54 crore 88 lakh rupees have been traded in one day. Earlier, on 13 August 2078, shares worth 15 billion 65 crores were traded. Thursday's trading was the highest since then. On Wednesday, shares worth 12 billion 592 million 66 thousand 113 rupees were traded.

The interest rates were continuously falling since a few months ago, while the market is not growing even though there is sufficient liquidity in banks and financial institutions, now the new government has been formed and rumors of a flexible monetary policy have helped the growth of NEPSE, said Bharat Ranabhat, the former chairman of the Stock Brokers Association. The main thing that affects the market is money (share loans) and loan interest rates. Even though it was already favorable for the market, the confidence of the investors did not increase, he said, and the rumors that the new government and the market-friendly monetary policy will come when the infrastructure is easy have worked.

Ranabhat said that there are signs that the stock market will rise for a few more days due to the fact that there is no abnormal trading in the market, interest rates are likely to fall further, banks and financial institutions are asking investors for share loans, and the supply has not increased due to the lack of listing of new companies.

Although the Deputy Prime Minister and Minister of Finance claims that the government is responsible for the stock market, it does not appear to be the case. The government has not been able to appoint the Chairman of the Securities Board for about 7 months. The presidential candidate dispute is believed to be a factor in the collapse of the old alliance. Many infrastructures, including the investor protection fund provided by law, have not been established. Since last January, all the permits for issuance of securities have been suspended. When the board is without a chairman, there has been no effective monitoring and no action has been taken against the culprits. Therefore, as there is no reliable reason for the growth of the market, experts have suggested to be very restrained in trading shares.

Meanwhile, Finance Minister Paudel has changed the chairman of the Nepal Securities Board. In the Securities Act, 2063, if the post of Chairman of the Nepal Securities Board becomes vacant, a member representing the Ministry of Finance shall act as Chairman of the Board. Accordingly, earlier Narendra Rana held the responsibility of the board chairman. The finance ministry on Thursday appointed joint secretary Mahesh Baral to replace Rana on the board. On Thursday, Baral took the oath of office and secrecy as the chairman of the board before Finance Minister Paudel.