NEPSE will continue its bullish trend: Stakeholders

ShareSansar, November 22:

Fuelled by the ongoing results of the Constituent Assembly election, the stock market will continue to surge next week, too, according to key stakeholders in the market.

Stakeholders, ranging from brokers to individual as well as institutional investors said that the market further rise and will probably breach 700 levels early next week – even if the UCPN (Maoist) start consolidating its position through votes cast under the Proportional Representation (PR) system.

“The benchmark index will definitely reach 700 levels after the market opens next week,” says Narendra Sijapati, chairperson of the Stock Brokers’ Association. “It might, however, go on a correction mode toward the end of the week when the final results start to pour.”

He further projected that even in the worst case scenario the market will still remain above 600 levels it breached just ahead of the November 19 election.

One of the prominent individual investors and market analyst, Uddhav Siwakoti also said that the surge will continue next week as the indication so far suggests that Nepali Congress and CPN-UML, the two largest parties with liberal economic policies, are heading toward forming a ruling coalition.

“This has resulted in a positive market sentiment,” Siwakoti further said. “If the investors do not take a short-term position, the surge will continue throughout the week. If they could see the larger picture, the market will again hit circuit breakers next week.”

Apart from the political development in favor of political stability in the country, He further said that the recent move of the BFIs, especially the commercial banks, to slash their interest rates in the face of surplus liquidity is also conducive for the market growth.

Institutional investors are also upbeat.

“The surge the market witnessed last week was not unnatural not only because of the election outcome but also because the trading had taken place after a long hiatus,” says Pravin Raman Parajuli, the Chief Executive Officer of Nabil Investment Banking Limited.

“Nonetheless, the market will continue to improve next week,” he quickly added. “Apart from the election results, low bank interest rate and positive first quarter reports of large number of listed companies will continue to push the market ahead.”

Parajuli further added that he believes that the market will not go on correction mode next week.

Improvement in the benchmark index as well as the volume of trades over the past few months as well as overwhelming response in the primary market also show upbeat market sentiment.
 
The fact that the NEPSE has breached 600 point hurdles itself is very much likely to push the benchmark index further – a psychological factor.
 
Positive results of most of the BFIs and handsome dividends offered by the BFIs and insurance companies have been fuelling the market for weeks now.
 
Nepal Rastra Bank’s move to push the BFIs to further soar up their paid-up will also definitely have a positive impact on the bourse. Insurance Board is also expected to issue similar directive to insurance companies.
 
Yet another factor that will impel the stock market is the four mutual funds in the pipeline. Siddhartha Capital Limited, Laxmi Capital Limited, NIBL Capital Limited and NMB Capital Limited are expected to float their investment schemes shortly after the festive season.
 
So far there are only two mutual funds in the capital market.
 
Further, CDS and clearing system, which has overcome the row with the share brokers and is about to operate full-fledged within a few months, is like an icing on the cake for the stock market.

Technically too, the stock market is moving towards the direction of 680 levels.