Kathmandu, July 25: The stock market transactions and NEPSE index are increasing steadily as confidence of investors in the capital market has increased with the intensity of economic activities.
NEPSE transactions took a new height last week and its increase was highest in six years.Â This has increased the confidence of the investors in capital market.
Monetary policy was made public last Friday, and NEPSE got a bullish trend when market opened on Sunday until market closure. NEPSE reached 1074 points with an increase of 29 points on the day.
Likewise, NEPSE took a new height on Monday as well, it recorded a highest transaction so far of Rs. 1.20 billion in the history of NEPSE.Â But the NEPSE index however, could not increase more than 1083.Â On Tuesday, NEPSE came down to 1077 points and again increased to 1081 the next day. On the weekend, it came down to 1079 points.Â This week, transaction amount has come down below one billion rupees.
NEPSE has improved in average with the improvement of the bank and financial institutions (FI) sub-index. Although insurance and hydel company sub-index fluctuated, it was also high. An official of Nepal Stock Exchange said there is no concern on up and down of the index with transactions.Â We can only suppose that index increases if there is high increase in transaction. If NEPSE rises even if transactiona are very low, that is unnatural.
After Cash Reserve Ratio (CRR) was included in monetary policy, investors are attracted with the expectation that companies distribute bonus and rights shares.Â But this policy decreases the profit of companies, and investment should not be made in this way, say experts.
They say investors also increase or decrease the market volume by themselves. The positive change was because of bank profit, monetary policy and confidence of investors, said chairman of the Small Investors’ Association Deepak Karki. The next day of new budget of the current FY, NEPSE came down by 8 points; it was a negative impact as there was no provision of reducing capital gain tax even if there was rumor of it and investors’ expectation was not fulfilled.
Nepal Bankers’ Association Chairman Rajan Singh Bhandari says there was positive impact as investment environment was created and budget and monetary policy guaranteed the security of investment.Â Nepal Stock Exchange is of the opinion that transactions increased as one agent can transact from two computers and that their capacity was increased. As there is more demand by investors, NEPSE has taken the new height.
How does tens of millions for rupees comes from in the capital market? A high official of Nepal Rastra Bank (NRB) says there is Rs.Â 100 billion investment- ready liquidity in the market and its easy place is share market. The official said if the index goes above 2000 then one has to be alert while investing. Vice Chairman of the Development Bankers’ Association Bharatraj Dhakal said share market was improved from enough liquidity and end of fiscal year and government economic policy.
Bankers Association Chairman Bhandari said as difficulties were solved even when NEPSE was quite low, there will be no problem now in banks and financial institutions.Â There will be no serious impact, as the banks and FIs index has not increased much, even if the micro finance and insurance sub-index went quite high. Nepal Stock Board Spokesperson Niraj Giri said the present situation is not unnatural, on the basis of market value and company profit.
If it goes much higher than this there will be risk, he said and suggested not to invest only on the basis of rumors, without analyzing the basic condition of the company.