KATHMANDU, Feb 16: The Nepal Stock Exchange (Nepse) index logged gains of 36.01 points, or 2.59 percent, on Thursday as CPN-UML Chairman KP Sharma Oli was sworn in as the new prime minister of the country.
The benchmark index closed at 1,424.95 points on the last trading day of the week.
The index, which was on a downward trend since it reached a new high last year, posted double-digit growth to cross 1,400-point level, indicating the investors' warm response to the government led by CPN-UML and backed by another communist party CPN (Maoist-Center).
Though stocks were on a freefall following news of left parties coming back to power, the mood of investors seemed to be swinging in favor of the left-alliance. Rising bank interest rates had also contributed to stock market rout.
The market rally on Thursday is the highest single day gain that the benchmark index has posted since January 1 when the market shot up by 44.22 points or 3.18 percent. With occasional gains, the benchmark index has been in a correction mode ever since.
From the opening hour on Thursday when there were news reports that the outgoing Prime Minister Sher Bahadur Deuba was preparing to tender his resignation to pave the way for the appointment of Oli as the executive head of the country, the stocks were climbing, reflecting investors' warm reception to the incoming Prime Minister.
“There was a kind of buying pressure in the market as investors, who were worried in the immediate aftermath of the victory of the left alliance in the recently held elections, seemed to be buoyed by the formation of the new government which they believe will be stable and unleash growth,” said a stockbroker, requesting anonymity as brokers are not authorized to comment on movement of stocks. “As there has not been any fundamental shift in other factors like the performance of listed companies or macroeconomic condition of the country, it would be safe to say that today's surge of stocks is primarily driven by the positive psychology of the investors toward the new government.”
All trading groups registered gains on Thursday. Insurance group was the highest gainer of the day with its sub-index climbing up 213.95 points to close at 2,475.66 points.
Microfinance group followed suit, gaining 62.91 points to close at 1,725.74 points. The sub-index of Development Bank group also went up 55.5 points to settle at 1,628.83 points. Hydropower group ended 49.04 points higher at 1,823.37 points. Banking, the heavyweight group, also logged gains of 31.39 points to end the day's trading at 1,242.38 points. Hotels group went up by 22.96 points, while Finance sub-index registered a gain of 17.55 points.
Manufacturing and Processing group went up 50.74 points and 'Others' sub-index also gained 7.36 points. Trading sub-index also finished 5.99 points higher.
A total of 1.51 million units of shares of 165 companies worth Rs 663.96 million were traded in the market on Thursday through 6,863 transactions.