KATHMANDU, July 30: Nepal Stock Exchange (Nepse) index gained 79.1 points this week to close at 1,881.45 points on Thursday--the last trading day of the week.
Trading could not take place on Sunday -- the first trading day of the week - as brokers sought time to enforce the new brokerage fees set by the government. In the subsequent trading days, the benchmark index climbed to record highs every day, prompting the Securities Board of Nepal (Sebon) to advise investors to trade with caution in the bullish market.
Following the Sebon's caution, the market went down by 3.52 points on Thursday from Wednesday's record high of 1,881.45 points.
The stock market also registered a record high daily turnover on Tuesday as shares worth Rs 2.78 billion changed hands. This figure is more than double the daily turnover recorded on Monday.
Nepse's decision to extend trading time to four hours, full-fledged implementation of paper-less trading system, reduction in brokerage commission, and cheaper loans from bank and financial institutions (BFIs) have been attributed for bulging turnover in the country's only stock market.
Brokers say that the investors, who were attracted toward shares of microfinance institutions, are now shifting to banking stocks as they see better return prospects there. Some of the commercial banks, who have published their financial results for the fourth quarter of 2015/16, have also encouraged investors to get hold of banking shares.
"Banks are posting impressive profits, indicating that they will be in a position to distribute more dividends. This has encouraged investors to get shares of commercial banks," Anjan Raj Poudyal, former president of Stock Brokers Association of Nepal (SBAN), told Republica.
"Investors are getting cheaper funds as bank rates are continuously falling. There has not been any political upheaval, as the transition to the new government seems to be moving in a smooth way. Everything is boosting the confidence of investors," he added.
Investors say that the Sebon's recent decision to slash brokerage commission, among other reform initiatives, has been raising their confidence.
"The full-fledged implementation of central depository system that allows investors to see market depth, and the decision to reduce exorbitantly high brokerage commission, among other reform initiatives, have made investors buoyant," Shree Krishna Shrestha, an investor, said.