The stock market has turned bullish in recent days as investors have become hopeful of Tarai turmoil and Indian blockade coming to an end soon.
According to analysts, the stock market growth is also due to full-fledged implementation of dematerialized form of shares trading enforced by Nepse as part of its modernization plan. Nepse started full-fledged implementation of central depository system (CDS) from January 16. The modernization of shares trading system has also boosted the confidence of investors toward the secondary market, according to stock brokers. They also said liquidity surplus in the banking system has also fuelled stock market growth.
“Though this is the time when the market generally pursues a correction course as most of the companies have already conducted annual general meeting and distributed dividend, the current rise in the benchmark index can be attributed to excess liquidity in the banking system,” Anjan Raj Poudyal, former president of Stock Brokers Association of Nepal (SBAN), said. “Interest rates are going down due to excess liquidity. Investors not only find easy financing option at this moment, but they also think that it is beneficial to invest their fund in the rising market.”
However, many analysts are uncomfortable with the way the market is going up when the economy is suffering due to the recent devastating earthquake, Tarai turmoil and unofficial economic blockade imposed by India. They argue that the bullish trend is solely dictated by the speculations and rumors as the macroeconomic fundamentals do not support the market growth.
Except Finance group, all trading groups ended on the green zone on Thursday. Hydropower group climbed 41.41 points to close at 2,179.06 points. Banking, Hotels, Development Bank, Insurance, Manufacturing and Processing, and 'Others' groups also logged gains on Thursday. Finance group ended 1.92 points lower at 601.63 points.
A total of 1.14 million units of shares of 124 companies worth Rs 709.18 million were traded in the market this week through 3,365 transactions.
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