June 7, 2017 01:00 AM NPT
Nepse index gains 34.72 points
KATHMANDU, June 7: Nepal Stock Exchange (Nepse) index jumped by 34.72 points, or 2.17 percent, on Tuesday to close at 1,637 points, as the country was electing a new government under the leadership of Nepali Congress (NC).
The stocks had climbed 8.84 points on Monday to close at 1,602.65 points after the main opposition party agreed to lift house obstruction and pave way for the Nepali Congress President Sher Bahadur Deuba to be elected as the 40th Prime Minister of the country.
While the stocks were taking a dive in previous trading days, the agreement between the government and the opposition parties on Monday buoyed stock investors.
Despite a political impasse in the parliament for few days, the NC has lined a support of nearly two-third majority to form the new government under its president Deuba.
With the election process going in the parliament, the investors found a reason to cheer about and get hold of shares that were on a downward trend in the wake of rising interest rates, tightening of credit flows toward stock market and increase in margin calls.
“The leadership of the Nepali Congress (NC) has a history of getting broad support from the stock market and its investors,” Prakash Tiwari, a stock analyst, told Republica. “Rise of the NC to the government leadership has driven the stock market as there is positive market sentiment toward this party,” Tiwari, who is also the Chief Financial Analyst at Hathway Investment Nepal -- an investment company, told Republica.
Analysts say that the perception among investors about Nepali Congress as a more market-friendly party that pursues policies of market liberalism and capitalism tend to drive stocks when the party leads the government.
Even the budget statement presented by Minister for Finance Krishna Bahadur Mahara last Monday had received a frosty reception in the stock market. The benchmark index shed nearly 22 points from the 1,615.58 points on the eve of budget presentation day to 1,593.81 points on Sunday.
Tiwari said that rumors about Mahesh Acharya as a possible pick of Deuba as Minister for Finance in the new cabinet has also boosted investors' confidence. However, the party has not clearly stated who would hold the reins of the finance ministry.
The stock market, which was observing a slump, also saw turnover and transaction volume rise on Tuesday. A total of 1.52 million units of shares of 148 companies worth Rs 912.33 million changed hands through 7,886 transactions on Tuesday.
Only the Manufacturing and Processing group registered loss on Tuesday as its sub-index fell 14.06 points to close at 2,441.78 points. Insurance group led the gaining side as its sub-index went up by 172.57 points to close at 8,707.48 points. Hotels group closed 62.45 points higher at 2,294.45 points. Banking, the heavyweight group, also posted a gain of 35.82 points to end the day at 1,466.09 points. Development Bank, Hydropower and Others group also climbed up 35.38 points, 35.68 points and 15.62 points, respectively. Finance group logged gains of 7.31 points.