NEPSE was on a break for five days to observe Dashain, Nepal's grandest festival. The market is resuming today, i.e. Kartik 12.
Before NEPSE was closed for the festive season, the index had closed higher than the previous close for four consecutive days. However, the total turnover and investor participation had become sluggish for a few days before the holidays. On the last day before Dashain, the index closed at 1,606.25.
Like in other years, the market is resuming after the holidays from today. However, it is not opening in the same conditions this time. In the previous years, investors were believed to be in a "festive mood" even after the holidays. Many used to visit their villages outside Kathmandu. Since these investors did not return immediately after the holidays, investor participation would dwindle during the first few days.
However, things are not the same this time. With the trading platform and payment system made online, investors can now trade from any part of the world. As a result, Bharat Ranabhat, chairman of Stock Brokers Association of Nepal points out that if people want to buy or sell, they can buy or sell without having to return to Kathmandu. Furthermore, we should also incorporate the fact that many did not leave the nation's capital this time in the first place.
Dashain has a special place in the heart of Nepal. This is a festival of excess fun and joy, and with it comes excess expenditure. However, people did not celebrate extravagantly this time, and one can assume that the investment capital of investors is still intact. As a result, it can be assumed that investors haven't lost their buying power. This might mean the trading volume might sustain, if not flourish.
Agreeing to the factors described above, Dipendra Agrawal, an experienced investor, also stated additional reasons why things are different this time. Because of the economic slowdown, interest rates are low and other investment alternatives are limited. These are solid reasons why the stock market is an attractive investment vehicle at present.
Furthermore, Agrawal points out that banks, which make up the majority of the NEPSE index, are giving a better dividend than anticipated. For some reason, banks who have already proposed a dividend seem to distribute a higher percentage of dividends than calculated from the distributable profit shown in the last quarter of the previous fiscal year.
Thus, observing how the index might fare till the Tihar holidays will be interesting. Where do you think the market is headed? Drop your opinion in the comment section below.
Dashain Effect in NEPSE: What happens before and after the holidays?
Disclaimer: Financial markets are prone to volatility and unexpected loss. Sharesansar presents everything from a journalistic stance and refuses to provide an opinion on the stock market.