Investors give thumbs up to monetary policy
KATHMANDU, July 20:
Investors have given a thumbs up to the Monetary Policy 2014/15 issued by Nepal Rastra Bank (NRB) on Friday, with the Nepal Nepal Stock Exchange (Nepse) index increasing by a whopping 29.08 points to close at 70-month high of 1,074.97 points on Sunday.
Previously, the benchmark index had reached to this level on September 7, 2008. The market, however, had taken downward trend since then. The market started recovering after the Khil Raj Regmi-led government announced the date for Constituent Assembly (CA) election last year, ending protracted political impasse. Since then, the market has been recording steady growth despite minor corrections.
The benchmark index had plunged to an all-time low of 292.31 points on June 15, 2011 after climbing to the record high of 1,175.38 points on August 31, 2008. However, investors started putting money into the bourse following the sweeping victory of the Nepali Congress and CPN-UML, considered to be the proponent of liberal economic policy, in the CA election.
Though the budget for 2014/15 had disappointed investors, who had high hopes from the Finance Minister Ram Sharan Mahat, the new monetary policy seemed to have rejuvenated them.
“The astounding surge in the benchmark index is because of the monetary policy. Investors had little hopes from the monetary policy as the budget had let them down,” Anjan Raj Poudel, proprietor of Thrive Brokerage House, said, adding, “However, the monetary policy came up with some supportive policies which they had not expected.”
As the central bank did not extend deadline for bank and finance institutions (BFIs) to maintain their required paid-up capital, they are now required to issue bonus shares or rights shares to increase their capital base.
“Investors went after the stocks of commercial banks development banks and finance groups companies, particularly of those with low capital base,” he added.
Demand for shares of commercial banks like Kumari Bank Ltd and Nepal Credit and Commercial Bank Ltd, which are yet meet the paid-up capital requirement, was high on the day.
The Insurance group was the biggest gainer of the day with its sub-index going up by 84.04 points to close at 4,485.94 points. The Banking sub-index also went up by 35.87 points to settle at 993.5 points.
The demand for Finance stocks was so high that Nepse was forced to clamp circuit breaker on trading of the stocks of Finance companies.
Narendra Raj Sijapati, president of Stock Brokers Association Nepal, said the rise in demand for stocks of finance companies was mainly due the central bank´s policy of raising capital base of micro-finance companies based in places where there is low presence of BFIs. “The policy would require micro-finance institutions to raise their paid-up capital which means investors would get bonus or rights shares. This fuelled the demand for shares of finance companies,” added Sijapati.
According to Poudel, the central bank´s relatively soft stance on loans against shares has also made investors jubilant. “Investors had feared that NRB would make policy on loan against shares strict. But the central bank said that it would only regulate such loan portfolio,” added Poudel.
A total of 1.8 million units of shares of 150 companies worth Rs 966 million were traded through 4,839 transactions on Sunday. “If bulk deal and promoter shares are not counted, this is the record high daily turnover recorded in the bourse,” added Poudel.
-- Daily turnover close to Rs 1 billion
-- Monetary policy buoyed investors up
-- Investors after stock of BFIs with low paid-up capital
-- All trading groups on the green zone
Source: Republica
