June 10, 2016 08:34 PM NPT
KATHMANDU, June 10: Nepal Stock Exchange (Nepse) index climbed up 83.56 points this week to close at record high of 1,566.7 points on Thursday--the last trading day of the week.
While the stock market had taken a dip on the first trading day by nearly 35 points, the market rallied in the remaining trading days of the week.
Analysts say that the current rise in the market is mainly due to the growth in the price of share price of insurance companies. As the government is preparing to amend the Insurance Act, investors are upbeat that the new amendments will raise paid-up capital requirement for the insurance companies, they say.
"There was some volatility in the initial trading days as media reports said proposed amendment in Bank and Financial Institution Act (BAFIA) would allow promoters of BFIs to offload their shares within seven years and that the central bank would restrict flow of money toward stock market," said Anjan Raj Poudyal, former president of Stock Brokers Association of Nepal (SBAN). "The market not only recovered points dropped on the first trading day, but set a new record."
According to Poudyal, the clarification of the central bank's spokesperson clarification about the plan to curb the flow of finance toward stock market helped the benchmark index to recover. “Investors hope to get lucrative stock dividend and rights issue from the insurance companies if the paid-up capital requirement is hiked akin to the BFIs. This has fuelled the growth of the Insurance sub-index as well as the overall market," Poudyal added.
The sub-index of Insurance group climbed up 1,246.91 points to 8,654.32 points. Banking, the heavyweight trading group in the secondary market, also shot up 56.76 points to close at 1,418.35 points. The sub-indices of Development Bank, Hydropower and Manufacturing and Processing groups also went up 59.29 points, 56.72 points and 25.94 points, respectively, to settle at 1,530.49 points, 2,453.24 points and 2,339.33 points. Finance group also ended 20.6 points higher at 735.81 points. 'Others' group also registered a gain of 12.92 points to close at 785.96 points. Hotels group, however, shed 106.47 points to end the week at 1,946.55 points.
A total of 9.25 million units of shares of 149 companies worth Rs 6.86 billion were traded in the market this week through 29,812 transactions. The turnover is 15.29 percent higher compared to last week.