The stock market has remained bullish this week setting new records almost every day amid hopes among investors that the ongoing Tarai unrest and Indian blockade was about to be lifted. The full-fledged implementation of dematerialized form of shares trading as part of the stock market modernization plan has also lifted the confidence of investors in the market, according to market analysts."Implementation of dematerialization system has made trading process easier and faster. With the ownership transfer becoming faster, investors can trade securities within four days of buying the shares. This has increased trading frequency and turnover which helped to push the market up," Narendra Raj Sijapati, operator of Kalika Securities -- a brokerage firm, told Republica.
He also attributed falling interest rates as the other reason behind rise in the benchmark index. "Liquidity surplus in the banking system has provided investors a cheaper financing option to invest in the stock market. Also, people, who have money are tempted toward the bullish market, rather than parking it in the banks that give meager interest of 1 to 3 percent now," he said, adding that surging demands against the backdrop of excess liquidity pushed the benchmark index toward the peak. "Investors are also buoyed by the second quarter report of listed companies which are posting impressive profits despite several problems that the country has been facing," he added.
Many say the benchmark index will soar once the unrest in Tarai district comes to an end.
However, many economists say that the market is acting in an irrational way. They say that the stock market becoming bullish at a time when the economy is suffering could be due to speculations.
All trading groups ended on green zone this week. Development Banks led the gaining side as its sub-index rose 77 points to end the week at 1,294.06 points. Manufacturing and Processing sub-index climbed 54.43 points to close at 1,922.86 points. Insurance group followed suit with its sub-index going up by 46.9 points to settle at 5,466.46 points. Banking, the heavyweight trading group, also ended 26.08 points higher at 1,137.52 points. Hydropower and Hotels sub-indices went up by 22.78 points and 20.7 points, respectively, to settle at 2,179.06 points and 1,771.43 points. 'Others' and Finance groups also logged gains of 18.8 points and 8.1 point to close at 811.8 points and 601.63 points, respectively. Trading sub-index group remained unchanged at 201.38 points.
A total of 4.47 million units of shares of 128 companies worth Rs 2.8 billion were traded in the market through 13,922 transactions this week. The turnover is 28.21 points higher than the total turnover recorded last week.
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