Nepse gains as BFIs rebound

ShareSansar, August 21:

Encouraged by the central bank’s directive, which is good for the long-term growth of the BFIs, the only secondary market of the country closed in the green zone today, gaining  2.42 points.

Not only did the benchmark index of Nepal Stock Exchange Limited (Nepse) has climbed back to 998.13 level, the turnover was also very impressive at Rs 63.45 crore.

Though the investors were wary and somewhat confused to all sorts of rumors about the new directive of Nepal Rastra Bank, they regained confidence after the central bank actually published it.

Apart from encouraging the BFIs to give more of bonus shares than cash dividend, the central bank directive also clarified that the investment cap of 1 percent was imposed only for the ‘held-for-trading’. ‘Held-for-trading’ refers to the debt and equity investments that are purchased with the intent of selling them within a short period of time (usually less than one year).

Consequently, the market began to rally behind the BFI scrip. The banking group, with the highest market capitalization, gained massive 18.81 points by the time the market closed for the day.

The Finance sub-index also closed in the green zone with 2.87 point gain while the Development Bank group lost only negligible 0.02 points.

On the other hand, the Hydropower and Insurance groups lost staggering 139.2 and 111.15 points respectively.

Though the central bank’s directive does not directly impact the insurance group, some observers believe that institutional investors from the banking sector resorting to ‘held-for-trading’ strategy might have started to liquidate insurance stock to contain its investment to 1 percent by the end of the current fiscal year – as directed by the central bank.

Insofar as the slump in the hydropower group is concerned, Chilime’s management row apparently played the major role.

Hotels group also lost 63.11 points, Others group shed 2.35 points while the Manufacturing group gained 2.18 points.