Share market will hit a new high after the election
ShareSansar, November 17:
The share market will continue its bullish trend and will hit a new high after the Constituent Assembly election slated for November 19, according to the stakeholders, including the regulators, brokers, investors and analysts.
“The market also looks stable and is growing gradually, which is good. We think the market will further grow after the CA election,” Niraj Giri, the spokesperson of the Securities Board of Nepal (SEBON) told ShareSansar. com.
Though there is no denying that the pace of growth will eventually be determined by the policies of the new government to be formed after the election, it is still very unlikely to go on a downward spiral –unless an unprecedented crisis – economical, political or otherwise take place.
Since nothing like that seem possible in the near future, the market sentiment is by and large quite upbeat.
“The market will definitely surge when it opens immediately after the election,” says Jeevan Kumar Prasai of Sumeru Securities Private Limited, one of the brokers. “The surge we saw over the past few days was basically propelled by the market sentiment that there will be political stability in the country.”
Prasai went on to add that though the market will be influenced after we get the final election results, he, still, does not “see major upheaval like the one we witnessed when the market had crashed a few years back”.
Apart from the hope of ending festering political transition in the country, the market players are confident also because of other factors such as surplus liquidity and overall good performance of the listed companies, especially the commercial banks in the first quarter of current fiscal year.
Twenty-four out of the total 31 commercial banks have reported a net profit of Rs 3.74 arba in the first quarter of the current fiscal year, which is 15.27 percent higher than the profit they posted in the corresponding quarter last year.
Partial implementation of the CDS within a month or two and the ongoing process to upgrade Nepal Stock Exchange for a fully automated trading is also helpful to make the investors confident about the market.
‘Market will continue to rise for at least a year’
Ambika Prasad Paudel of Hathway Investment, a leading institutional investor, is confident that the stock market will continue to rise for at least one year.
“The market will definitely rise for the next one year no matter what kind of government is formed after the election,” says Paudel, citing a number of solid reasons to back his statement.
“Most importantly,” Paudel says, “the political vacuum that we have witnessed for the past few years will end immediately after the election and there will at least be semblance of stability in the country for a year.”
He further says that even if the country does not get a government with a strong democratic inclination, he does not see any reason as to why the market would be affected to such a degree that it will go on a freefall.
Another reason he cites for the sustained growth is the next wave of huge liquidity after the election as the money doled out in the run up to the election will enter the banking system, a chunk of which again will directly/ indirectly investment in the capital market.
One of the largest investors in the stock market, Nirmal Pradhan is also very optimistic about the growth of the market in the months to come – notwithstanding the change in the government after the November 19 election.
Pradhan believes that the stock market will have to cross the 1175 level to complete the bullish trend.
“Until we cross 1175 points the bullish trend can be considered complete, hence we will have to cross that limit with a year or one and a half years,” he said, and went on to add that if there is political stability in the country, he won’t be surprised if the Nepse index reaches 1500 points by the next year or two.
He also believes that small companies were enough to complete the bullish trend.
