Buoyed by indications that the clause-wise voting process would start later on Sunday, marking a big step forward in the constitution-promulgation process, the stock market -- which has remained bullish the past few months -- leapt forward. Investors took this news as a sign that a constitution from this CA was now more certain.Analysts say political developments in the country make big impacts on the stock market.
"Investors are excited that the process would begin in a few hours, which has made promulgation of the much-awaited new constitution almost sure," Priya Raj Regmi, the president of Stock Brokers Association of Nepal (SBAN), told Republica. "The constitution will ensure political stability and put the country on the track of economic development. This very hope has lifted the confidence of investors and drove the market up," he added.
The market, which was more or less bearish in 2011 amid political stalemate, had started climbing only after all political parties agreed on the formation of an interim government under the then Chief Justice Khil Raj Regmi to hold the second CA elections in 2013.
The Nepse benchmark index had hit an all-time-low of 292.31 points on June 15, 2011, and was still hovering at around 500 points at the beginning of Fiscal Year 2013/14. It jumped by 34 points on November 21, 2013 -- the first trading day after the 2013 CA elections were successfully held on November 19 -- to close at 624.3 points.
Raj Kumar Timilsina, the president of Nepal Investors' Forum, says Sunday's development at the CA would lift the stock market which -- after almost a month of rising to hit record highs -- has been sluggish the last few days due to political tensions in the Tarai region. "Despite listed companies' announcement of handsome dividend and bonus shares, the market was not going up much due to violent protests in Tarai. Now that the CA has begun the voting process, investors are convinced there will be a new constitution and that disagreements between agitating parties will be addressed eventually," Timilisina said.
"The stock market is bound to bounce to new heights now. Even companies' returns and other economic fundamentals are backing the rise of the stock market," he says.
Except for the indexes of the Hotels and the Others groups, those of all trading groups ended gains. The index of the Insurance group jumped the highest -- by 101.65 points to close at 5,184.96 points -- on Sunday.
A total of 1.18 million units of shares of 135 companies worth Rs 468.16 million were traded in the market through 2,330 transactions on Sunday.
Related story
Understanding Stock Market
