Why Nepse benchmark is very likely to breach 1,175 levels

ShareSansar, August 1:

The benchmark index of Nepal Stock Exchange Limited (Nepse) has been hovering close to 1,100 level for the past few weeks.

Obviously the bullish market such as the one we are witnessing these days excites investors and also makes them somewhat nervous.

Will it breach the all-time high of 1,175 level shortly, or will the latest wave end in a depressed bull? Most importantly will the market crash after peaking like it did on August 2008.

Most of the stakeholders feel the market should breach 1,175 level basically on the accounts of growing daily turnover, investor awareness, liquidity accessibility, substantial return, among other things. But some eminent technical experts such as Jeevan Basnet do not rule out a possibility of depressed bull, which falls just short of the 1,175 mark – if the bull does not turn to BFIs soon.
 
Irrespective of their views, none of the noted analysts and other experts believe that the market will crash as it did six years ago after the peak.

“The market can go into immediate correct only if the central bank strictly tightens margin lending or the BFIs raise the interest rate significantly. This does not look like as of now,” says Rabindra Bhattarai, a noted analyst and share market trainer.

He feels that the market will continue to rise in days to come for some time and cross the previous peak – mainly due to excess liquidity in the market.

Moreover, now that the benchmark index hovers around 1,100 level, it does not need an expert to see that the market will most probably breach 1,175 level soon as the BFI stocks tend to rise in this time of the year when they start to come out with their fourth quarterly reports.
 
Most of the BFIs that have published their Q4 financial reports so far have reported impressive growth.

Similarly, government’s fiscal policy that strongly promotes hydropower development, coupled with expectation of deals on power trade and hydropower project development during the upcoming visit of Indian Prime Minister Narendra Modi are boosting the confidence of those with stakes in the hydropower sector.

Add to that a number of encouraging steps taken by Nepse to expedite CDS operation in the country since the beginning of the new fiscal year. If things go as planned, the market will not just go on to breach 1,175 level, but rise dramatically within the next few months, note experts.

Little wonder that investors feel pretty upbeat and confident about the market growth.
 
“Though the new monetary policy suggest measures to tighten marginal lending, everyone, including the central bank officials themselves know very well that it is not possible given the excess liquidity in the system,” says noted stock analyst and investor Uddhav Siwakoti. “Irrespective of this, the market will not be affected as long as the investors feel confident, and the investors are very confident at this point.”

All of the experts, nonetheless, urge investors not just to be driven by excitement, but to do thorough investigation of the background of the management and financial health of the listed companies before investing on their scrip.