The NEPSE had dropped by 6.88 points since Sunday, after the dismissal of the Chief of the Army Staff by the then government.
“NEPSE´s Tuesday rally shows that investors are hopeful that the future government will be more committed to the development of the capital market, unlike the Maoist government,” says Nanda Kishore Mundada, president of the Nepal Stock Brokers Association.
But the health of the stock market is also determined by factors other than political developments and thus the sunny outlook must be moderated a tad. Mundada says that the gains made in the sole secondary stock market will not continue for very long as the capital market has been also been flooded with new arrivals of ordinary shares-- made through Initial Public Offerings (IPO)-- along with a number of rights shares, from different companies. These new entries will pressure investors to sell some of the shares they hold, to raise the amount needed to buy the new shares. Mundada says that the total percentage of shares bought and sold on Tuesday stood at about 75:25.
During Tuesday´s trading, all groups of companies except the hydropower group made considerable gains. According to NEPSE, the Other group´s and the Finance groups´ indices soared by 11.75 points and 11.56 points, to reach 616.83 points and 745.99 points. Similarly, the indices of the Banking and the Development Bank groups also rose by 8.78 points and7.35 points to close at 650.37 points and 769.27 points, respectively. The Insurance and Manufacturing groups also made gains-- of 0.69 points and 2.96 points-- to close at 636.47 points and 436.65 points, respectively.
In like manner, the Float Index, which represents all the shares floated in the market, went up by 0.8 points to get to 63.23 points. The Sensitive Index, which indicates only category ´A´ companies, also rose by 2.5 points, to reach 172.39 points. The total market capitalization increased to Rs 415.52 billion on Tuesday, up from Rs 410.60 billion on Monday.
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