What 2014 has in store for the share market?

On the onset of the New Year, ShareSansar.com talks to cross-section of key stakeholders in the stock market to know how what is their outlook for the year 2014 – can the market sustain its rally? What are its prospects and challenges? And, which scrips are going to fair better? Views expressed by the experts are purely individual and may not completely reflect the ground reality. But they definitely deserve serious consideration. Check it out:

Ambika Prasad Paudel
Chair, Hathway Investment Nepal Limited

Where do you see the market in 2014?

As morning shows the day, the trading at the NEPSE today clearly suggests that the stock market will continue to surge in the new year. The good current growth is that the horizon is clear this time around. Besides economic factors that propel the market such inevitability of lowered interest rates, and introduction of new technology such as CDS and online trading, we are also more confident about stable political environment.  The market itself is acting more maturely, of late, as evident from the prices of scribes supported by the volume as well as ‘correction’.

Whenever we talk about the need for correction, it is often viewed as something that could bring the market down. What everyone needs to understand is a stock market cannot rally like a marathon. It is more like climbing Mount Everest. You stay at the base camp for a few days to acclimatize yourself before you start scaling the summit. Then you reach a certain height, say 3000 feet, and then come down and rest in the second base camp, and then start climbing again to a new height. And once you conquer the peak, you cannot possibly stay over there. You have to climb down, so that you regain the energy to climb again. The stock market works in a similar fashion.

What are the challenges to the market in the new year?

The biggest threat to the growth, sadly comes from the regulators’ habit of taking superficial steps to control the market without going into the depth of the situation. For instance, before asking all the BFIs to immediately submit details of the marginal lending, the central bank would have done well to check how much share loans are being defaulted in the banking system? Extremely few unlike other kinds of loans. Hence, the regulators need to very careful before jumping at any conclusion that could adversely affect the market.

Which are the five best scrips in your opinion?

Any scrips of the listed companies that has a good P/E ratio; the ones which believes in distributing bonus shares and where there is no conflict of interest among the promoters and is backed by a strong and effective management and board members.  These are some of the yardsticks while choosing any scrip.

But talking about my portfolio management plan, I would pick Everest Bank, Nabil Bank in the higher range, Sanima and NBL in the middle range and a couple of development banks based in Pokhara such as Muktinath and Garima.

‘2014 will be a year to remember’

Narendra Sijapati
Chair, Nepal Stock Brokers’ Association

Where do you see the market in 2014?

The market will continue to boom, and make a series of new records in the new year. There are solid reasons behind this assertion: Besides the political stability in the country and the general environment conducive for the capital market, introduction of CDS and online trading will aid the market rally.

The year 2014 will also see considerable enhancement of the capacity and efficiency of the brokers and their firms. Entry of some really strong real sector industries, besides strong presence of hydropower group would be other milestones for the stock market in the new year. Hence, it would not be an overestimation to say that 2014 is going to “a year to remember”, and if you ask me, the market will try to breach 2000 levels well within this year.

What are the challenges?

Yes, there are some challenges, too.  The biggest challenge for the market to realize its optimum growth is investor’s awareness or their financial education.  Given the general attraction toward the share market, more of new investors are likely to enter the market on trial and error basis, which is a risky approach. The growth might also be stymied in the longer run if the NEPSE fails to upgrade its system promptly.  But all in all, the market will continue to surge.

If you to pick five best scrips, what would they be?

Everest Bank, Chilime hydropower, Nabil Bank, NIC Asia and SBI for all the obvious reasons.

Uddhav Siwakoti,
Stock analyst & individual investor

Where do you see the market in 2014?

The capital market will not surge unless all the basic indicators are positive. In that sense, there is no reason to believe that the growth will slow down or stop now or into the new year. On the contrary, all the indicators suggest that the market will go on to break new records in 2014. Why? Look at the GDP, the political outlook, the amount of FDI being pledged for the current fiscal year, and further slashing of the banks’ interest rates, which is inevitable. To talk about the trend in the share market, the rally is backed by the turnover and, unlike in the past, there is no dearth of buyers whenever the market start to fall.

Do you see any challenges for the market?

Ironically enough, the challenge comes the regulators themselves. The central bank is already weary about the marginal lending – for some strange reason. Nevertheless, the investors do not need to be upset as even if the central bank goes on to block marginal lending in the future, it cannot stop the share loans that the BFIs have already issued to the investors. Moreover, with excess liquidity scenario, the money will eventually find its way to fuel the stock market. But the concern is the regulators’ haphazard decisions, which could adversely affect the market.

Which are the five best scrips in your opinion?

I don’t want to influence the market on the basis of my investment consideration. The investors should always go for the shares of those listed companies that fundamentally strong.  Nevertheless, talking strictly about my investment plans, the best scrips would be:  NIBL, SBI and NIC Asia in the middle gap; Everest in the upper range and Kumari in the lower range.

If you allow me to choose more scrips then I would also add Standard Chartered and Nabil in the upper range, and Siddhartha Bank in the lower range, besides Chilime.