Share market likely to see unprecedented rise in 2071
ShareSansar, April 13:
The year 2071 turned out to be a good year for the share market of the country. Scrip of insurance, hydropower and hotel groups fared the best while the banking group, which has been dominating the market for long, could not sustain its robust growth, though it also saw standard growth.
Will the market sustain the growth and even grow more, or will it decline in the new year?
The stakeholders, including individual and institutional investors and brokers, are quite optimistic about the outlook.
The newly elected chairman of Nepal Investor’s Forum, Raj Kumar Tilimisina says that the market will at least breach the previous high of 1175 in the year 2071, though going by the history of the market, every next bull has been double the previous one.
“As the CDS is also coming into partial operation and the authorities concerned are about to hire consultants for online trading, we are very upbeat about the prospect for the new year,” he told ShareSansar today.
But he was quick to add that the fact that the pro-market government is planning to bring the annual budget ahead of the normal time and the budget is expected to come up with a number of programs and policies that will support the capital market, there will more liquidity in the system, which will considerably fuel the share market.
“The day we can ensure full operation of CDS and online trading, the market will rise by at least ten times,” he adds. “Nevertheless, as I said before, the new year has a lot of good promises in store for the investors.” 
Pravin Raman Parajuli, the Chief Executive Officer of Nabil Investment is also quite optimistic. “I see no reason as to why the market should not grow in the new year,” says he. “Politically as well as economically things seem to be going positively.”
He further says that squeezing of the liquidity, upcoming third and fourth quarterly reports of the listed companies and high expectation from the new budget to be introduced by the pro-market government will continue to give further impetus to general investors’ sentiment and the market for most of 2071.
“If we can push for full-fledged implementation of CDS and start automated trading and also make an earnest attempt to bring in the real sector in the stock market, the growth can not only be sustained throughout the year 2071, but for a longer term,” Parajuli adds.
President of the Brokers’ Association Narendra Sijapati sounds much more upbeat.
“At the end of the year 2070, we see the market grew two fold over the year, and we also see even more bullish trend in the new year. I can categorically point out the factors, which, I strongly believe, will lead the market to breach the all-time high level of 1175 in the year 2071.”
According to him, besides considerable level of political and economic stability in the country and much better investment climate in almost a decade, operation of CDS, which is expected to start with the new year, existing surplus liquidity, ever-growing number of investors in the stock market, and the high possibility of the issuance of the IPO of Upper Tamakoshi are the factors that will take the market to a new high.
“If we can come with a new constitution within 2071, you cannot even believe how high the market can reach,” he adds.
One of the oldest and the largest stock brokers, Nanda Kishore Mundara, too, echoes Sijapati’s optimism.
“Though it is very difficult to forecast the market in the new year, I believe that the insurance and hydropower group, supported by other groups, can propel the market to a all-time high,” he says. “One thing is sure, the insurance sector will ensure more returns its investors and ‘insure’ them against any loss in the market this year, too.”
Mundara also sees merger and acquisition of the BFIs, increasing number of share investors and much expected liberal economic policies and programs of the pro-market government, besides the existing liquidity condition, as the major factors that will give momentum to the market in the 2071.
The market is expected to shoot up from the day one in that the seasonal factor --sluggish market in Falgun and Chaitra-- seems to be getting over. The IPOs floated during the recent past are being listed in the market, which is also keeping the investors sentiment high.
The banking group to fare better 
Since the banking group still covers the major chunk of the market share, performance of the BFIs, particularly the commercial banks, is a matter of concern.
But these experts who have been closely following the sector believe that the banking group will perform better in the new year for a number of reasons.
“Though conversion of promoter shares into ordinary ones was mainly responsible for impeding the desired growth of the banking sector in 2070, the good news is that the ever growing number of investors and trade volume has started to absorb the supply pressure,” say both Mundara and Sijapati. “This hints that the banking group is heading toward a robust growth in 2071.”
“Merger and acquisition policy will eventually fuel further growth of the banking sector as there will be lesser BFIs, which means lesser shares and better returns,” Mundara adds. “And don’t forget the central bank is likely to enforce BASEL III in days head. This will result in better dividend from the BFIs.”
“Even today, the banking sector has been posting standard growth, though not an exponential growth as many expected,” says Parajuli, adding that if the government and the regulator will come up with the policies that support their growth, exponential can be ensured.
Timilsina says that since the banking group index, which covers around 80 percent of the market, is below the benchmark index, this situation will be reversed in the new year to sustain the bullish trend.
