Optimism rallies stock market

The stock market rallied this week with investors´ hope for favorable policies for the development of the capital market from the to-be-formed cabinet. The growing primary market was also active this week with the issuance of Sunrise Bank´s IPO of Rs 32.5 crores that was oversubscribed by 26 times. Despite the cash crunch in the financial sector, both primary and secondary market performed strongly, revealing a definite rise in investor confidence and indicating a bull run in the future. [break]



NEPSE Roundup



As predicted, the NEPSE index (+1.05 percent) returned to the correction stage it was before the political uncertainty began. The benchmark gained 1 percent on Monday to reach 660.42 points, the highest point in four weeks, and hovered around 660 points throughout the week.



Seven out of the eight sectors in the NEPSE traded in the green this week. Two sectors made a huge leap this week. The Hydropower sector (+ 5.36 percent) was backed by the rise in Butwal Hydropower Company´s stock price which is expected to be affected next week by its recently published third quarterly results. The Trading sector (+8.76 percent) was led by the sudden jump of 10.22 percent in Bishal Bazaar Company´s share.



Despite failing to maintain their last week´s pace, Commercial banks remained in the green, backed by Standard Chartered (+3.44 percent) which posted the highest turnover of the week of Rs 36,647,405. Meanwhile, Everest Bank experienced price correction (-7.61percent) after last week´s irrational increase in price but not volume.



After posting the biggest loss last week, Development Banking sub-index recovered (+0.02 percent). Nepal Development Bank is issuing 2:1 right shares, and heavy gains were posted by Infrastructure Development Bank (+8.12 percent), and Clean Energy Development Bank (+13.97 percent) which faces continuous buying pressure as its grey market price remains high. Financial Institutions sub-index (+1.05 percent) advanced, which is led by the gains from Standard Finance Company (+9.81 percent), which is anticipated to upgrade itself into a commercial bank, and Nepal Express Finance Company (+10 percent).



Insurance companies, the only sector to trade in the red this week, continued their descent. Nepal Telecom Company resumed its distribution of 25 percent cash dividend after the court lifted the stay order on it. Its price oscillated, reflecting a confused state of mind of investors.



The impressive total weekly turnover of Rs 277,342,120 and the increased volume in the latter part of the week reflects investors´ confidence. Analysts anticipate the market to pick up further in next week´s trading, provided, the new government is formed under the leadership of a new party. As companies continue publishing their third quarterly results, market prices are likely to be affected next week.



(This is an analysis from Beed Management Pvt. Ltd. No express or implied warranty is made for usefulness or completeness of this information and no liability will be accepted for consequences of actions taken on the basis of this analysis).

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