Earlier on Wednesday, Nepse had broken the seven-year-old record of 1,175.38 points set on August 31, 2008. The benchmark index had closed at 1191.92 points on Wednesday.The market is on a bullish trend for the past few trading days after Nepal Rastra Bank (NRB) introduced a new provision through the Monetary Policy for Fiscal Year 2015/16, requiring bank and financial institutions (BFIs) to increase their minimum paid-up capital by multi-folds over the next two years.
According to stock brokers, the expectation among investors that the BFIs will offer bonus and rights shares has driven up the share market in recent days. NRB's circular last week, directing BFIs to distribute bonus shares and restricting cash dividend to raise paid-up capital further encouraged the investors to get hold of shares of BFIs, they said. Similarly, supply constraint of shares of banks due to enforcement of dematerialized form of trading of shares of all banks has further pushed up their share prices.
"Expectation of bonus shares and rights shares from BFIs has driven the market to a new high," said Praveen Raman Parajuli, CEO of Nabil Investment Banking Ltd. "As most of the share certificates have remained stuck in the dematerialization process, creating mismatch in the demand and supply, price of banking stocks has increased significantly. Such rise, however, is a short phenomenon which will end soon."
All trading groups, except 'Trading' and Hydropower, logged gains this week. The sub-indices of 'Trading' and 'Hydropower' groups shed 6.41 points and 2.58 points, respectively, to end the week's trading at 206.51 points and 2,124.37 points. Hotels group was the biggest gainer of the week as its sub-index went up by 219.53 points to close at 2,107.8 points. Insurance and Banking groups followed suit with their sub-indices climbed up by 140.9 points and 113.6 points, respectively, to settle at 4,749.08 points and 1,167.73 points. Manufacturing and Processing group also closed 113.38 points higher at 1,916.14 points. The Development Bank and Others sub-indices were up 70.48 points and 35.05 points, respectively, to close the week at 839.99 points and 882.32 points. Similarly, Finance group also ended on green, gaining 14.02 points to close at 552.09 points.
A total of 8.43 million units of shares of 169 companies worth Rs 4.93 billion were traded in the market through 24,635 transactions this week. The turnover is 26.12 percent higher compared to last week.
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