Trading suspended after benchmark index jumps 5 percent

KATHMANDU, March 29: Nepal Stock Exchange (Nepse) index gained a whopping 76.79 points on Tuesday to end the day’s trading at 1,610.62 points. 

The rapid upswing in the market led to the enforcement of circuit breakers. As frenzy investors went on a buying spree minutes after trading began, the first circuit breaker was clamped within 23 minutes of the beginning of trading after the benchmark index surged by three percent. 

Though the market reopened for trading at 11:38 am, the stock market operations were suspended again at 12:56 pm after the stocks jumped by four percent. Trading resumed at 1:26 pm only to be suspended for the day at 1:59 pm after the benchmark index rose by 5 percent. 

Although there is no apparent reason for such buoyancy, stocks are rallying from the first trading day of the week, indicating the end to a slowdown caused by tightening of loans by the bank and financial institutions (BFIs).

After climbing to a record high of 1,881.45 points on July 29 last year, the stocks are taking a dive, with some occasional rallies, after BFIs started tightening their funds toward the stock market. Investors say that the buying spree seen this week was a reaction toward election for local bodies. “There are news reports that Madhes-based parties are also likely to come on board for the local polls, while the government has also stepped up preparation for the election. This has boosted the confidence of investors,” Bachchu Ram Rimal, general secretary of the Nepal Investors Forum, told Republica.

“Also, many investors were on a wait-and-watch mode when the stocks were rotting. They were waiting for the prices to fall further to clinch shares at bargain prices. However, they are on a buying spree now as they have realized that shares would be expensive if they do not buy it now,” added Rimal.

However, there are some analysts who believe that the sudden upswing should be taken cautiously as it could put investors into financial risk. 

As BFIs are still tightening financing facility, which was a major driver of the stock market boom, analysts say that the buying decision based on ‘herd behavior’ could cause financial losses if stock prices start to tumble again. 

All trading groups logged gains on Tuesday. Insurance group was the biggest gainer of the day as its sub-index climbed 503.11 points to settle at 7,933.38 points.

The sub-indices of Hydropower and Development Bank groups also surged 106.51 points and 82.97 points, respectively, to end the day’s trading at 2,101.27 points and 1,799.26 points. Banking, the heavyweight group, also registered a gain of 75.09 points to close at 1,517.67 points. 

Hotels, Finance and Others groups also ended 71.09 points, 38.94 points and 10.12 points higher, respectively, at 2,125.14 points, 729.38 points and 683.71 points. 

A total of 2.58 million units of shares of 144 companies worth Rs 1.38 billion were traded in the market through 8,391 transactions on Tuesday. NMB Microfinance Bittiya Sanstha Ltd, Jebil Finance Ltd and Kisan Microfinance Bittiya Sanstha were the only companies who saw their share price shed value on Tuesday.

 
• nepal stock exchange
 
• nepse
 
• hydropower and development bank