The Nepse index, which measures investors´ confidence in the capital market, closed at 373.22 points on Wednesday (the last day of 2067 BS), down from 444.76 points recorded on April 13, 2010.[break]
The Nepse index shed points despite rise in the number of securities to around one billion units from about 770 million units recorded last year and listed companies jumping to 202 from 169.
“Stock market fell by 15 percent over the year despite some positive developments that were supposed to bring cheers to investors. Economic slowdown has been reflected in the stock market, said stock analyst Rabindra Bhattarai.
“Continued slackness in the capital market is not unnatural given the discouraging economic indicators.”
Establishment of Central Depository System (CDS) and Clearing Ltd, beginning of the process to select new stockbrokers, introduction of a draft of mutual fund regulations and beginning of the process to establish credit rating agency were some of the positive developments that the stock market saw over the past year. Similarly, softening of margin lending policy announced by Nepal Rastra Bank and the permission for Non-Resident Nepalese to invest in share market are the other positive developments in stock market.
“Stock market won´t rejuvenate unless we get new institutional investors. People are not much interested in putting money in the capital market as the government has failed to implement policies aimed at reviving the stock market,” said Nanda Kishore Mundada, president of Nepal Stock Brokers´ Association.
The benchmark index had gone up continuously after the UCPN (Maoist) withdrew its week-long political strike on May 6. Despite political consensus to extend term of Constituent Assembly (CA) on May 28, Nepse dropped to 490.08 points on May 31 from 506.35 points recorded a day earlier. The index gained 15 points on June 30 with the resignation of the then PM Madhav Kumar Nepal, aimed at ending long-running political instability.
But the gain did not continue for long. Even the announcement of budget for the fiscal year 2010/11, which was hailed by private sector as a positive step to end economic uncertainty, could not revive the investors´ confidence. A day after the declaration of budget, the index dropped by 2 points to settle at 423.35 points on Nov 21.
The index, however, bounced back, gaining 8.87 points over a week, after Nepal Rastra Bank Governor Dr Yubaraj Khatiwada announced to relax existing provisions in margin lending. Before the announcement, Nepse had hit 50-month low of 290.07 points on Dec 20.
Nepse employees brought share trading to a grinding halt on Jan 26 and 27, to press the management for implementation of past agreements.
The formation of new government under the leadership of Jhala Nath Khanal brought a brief respite in the capital market, as the benchmark index surged to 413.75 points on Feb 6 from 406. 82 points recorded on Feb 3.
The proposal by Maoist lawmakers to replace ´economic liberalization´ by ´self reliant mixed economic policy´ in the new constitution drew widespread criticism from the business community. As a result, Nepse index dropped 7.43 points to 376.75 points on March 15.
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