Stock analysts say shares of bank and financial institutions (BFIs) is lifting market, which is on a bullish trend for the past few months, to record high. Such attraction of investors toward shares of Banking group is mainly due to the decision of Nepal Rastra Bank (NRB) to raise the minimum paid-up capital of BFIs last year. Liquidity surplus in the banking system and lower interest rates is encouraging investors to pour their money into the stock market, they added."Investors got impressive stock dividend this year as the BFIs distributed bonus shares to raise paid-up capital to meet the new capital requirement," Anjan Raj Poudyal, former president of Stock Brokers Association of Nepal said. "The new paid-up capital requirement puts BFIs under pressure to offer more stock dividend to their shareholders in the coming year as well. Expectation of bonus shares is attracting investors toward banking shares."
Similarly, Gunanidhi Bhusal of Aryatara Investment and Securities Pvt Ltd interprets the recent climb in the stock market as a combined result of excess fund in the banking system and reaction of investors toward recent initiatives of capital market regulator Securities Board of Nepal (Sebon) toward modernizing trading system. "There is surplus of fund in the banking system which has sent the interest rates to an ultra-low level. Commoners feel that the money should be spent in the stock market to get better returns rather than parking funds in BFIs while other investors are getting loans at lower rate to invest in the stock market. There are also mutual funds which are making investment in the stock market," said Bhusal. "The recent initiatives of Sebon to modernize trading system have also been a supporting factor to boost the market," he added.
Banking, the heavyweight trading group, led the gaining side this week as its sub-index jumped 30.57 points to close at 1,233.87 points. 'Others' and Hotels groups followed suit, as their sub-indices went up by 14.1 points and 7.21 points, respectively, to close the week at 839.99 points and 1,779.1 points. Manufacturing and Processing sub-index also inched up 0.26 points to close at 1,999.04 points.
Insurance group, which had been rising continuously for the past many weeks, however, nosedived 131.01 points to settle at 6,336.45 points. Hydropower group also fell 68.32 points to end the week at 2,318.39 points.
Finance and Development Bank groups also ended 0.63 point and 0.89 point lower to 675.91 points and 1,360.88 points, respectively. 'Trading' group remained unchanged at 201.38 points.
A total of 6.61 million units of shares of 142 companies worth Rs 3.44 billion were traded in the stock market this week through 16,086 transactions. The market remained closed on Tuesday due to public holiday to mark Holi festival.
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