Nepse ends year on positive note
KATHMANDU, APR 13:
Despite the last minute surge in the secondary market, the share market index went down by 15 per cent due to a long gloomy trading in 2068 BS.
The secondary market that had opened at 373.22 points in the first trading day of 2068 BS — on April 14, 2011 — closed at 319.94 points today — on the last trading day of the year — losing 53.28 points.
The index continued its journey south all year long even reaching the lowest point for the last six years. The index went down to 292 points on June 15 and then surged to
380 points on July 17. Since then the index has hovered around 300 points. It once again went below 300 points to 298 points on April 29.
However, with the third quarter almost over, share prices are increasing as usual and investors who have obtained loans against shares from financial institutions have to maintain fewer margins. Among the subgroups, financial intermediaries –– commercial banks, development banks, finance companies and insurance companies — did not do well throughout the year.
However, the subgroups representing the real sector such as hotels, hydropower, manufacturing and others performed competently in the capital market in the last one year. Experts have blamed the imbalance between the supply and demand of securities in the stock market for pulling stock prices down.
Moreover, the continued higher interest rate in the financial market also did not help the stock market this year. Financial institutions did not revise their interest rate despite sufficient liquidity, and the trend of transferring funds from stock investments to deposits continued, plaguing the market with continued selling pressure.
Investors are shying away from shares due to the presence of more lucrative investment options such as the commodities market. Despite the government’s decision to slash capital gain tax by 50 per cent, the stock market remained unaffected.
Of late, investors have been pressurising the government and regulators to form a market rescue fund and to introduce institutional investors to absorb the excessive supply of securities in the market.
Angry investors have also decided to launch a phase-wise protest programme to make the government listen to their demands.
They have demanded the government to form a market rescue fund, and introduce
institutional investors and market makers so that the oversupplied market can be stabilised. They have demanded the regulators to introduce a provision of making financial institutions, insurance companies and institutional savers invest five per cent in stocks.
Likewise, they have asked the government to create an asset management company. According to technical forecasts, the Nepse index can rise up to 445.30 at the maximum. But there is a high possibility that the index will reach 380.23 points in 2069 BS, according to the technical analysis of Securities Research Center and Services.
Source: THT
