KATHMANDU: Nepal Stock Exchange (Nepse) benchmark index jumped 46.59 points on Monday to close at 1,564.87 points. The stock market rebounded on the second trading day of the week by double-digit following a long slump after Dashain festival. The single-day surge in the benchmark index was the highest in six months for a market that has recovered somewhat after a continuous dive due to the Dashain festival. The last time the market had surged by this level was on April 19 when the benchmark index climbed up 49.88 points. Analysts say that the investors have become buoyant as the country has headed toward provincial and federal level polls. “The country is now heading toward election. There are news reports that the parties are merging with each other and leaders are entering into bigger parties to ensure victory,” said Chhotelal Rauniyar, the vice president of Nepal Investors Forum. “These positive political developments have buoyed investors.” The elections for the federal parliament and provincial assemblies are scheduled to be held, respectively, on November 26 and December 7. The Election Commission has already started the election process.
Similarly, another factor that is driving up stocks is the liquidity position in the banking system. Investors are expecting the interest rates to fall with the bank and financial institutions (BFIs) having comfortable liquidity position. “There is expectation among investors that the BFIs will now reduce their interest rates from Kartik (mid-October) when they are supposed to publish their interest rates as they are now on comfortable liquidity position,” said Rauniyar. He said that the stock market has been reacting to even small news as the new and small investors tend to panic on small movement on stock price. Amid mismatch on the growth of deposit and loans, BFIs were facing the shortage of lendable fund until last month. Such shortage of lendable funds has pushed interest rates to an ‘ultra-high’ level. Following the shortage of lendable fund, BFIs were also tightening of the loans toward stock market. The tightening of the loans had driven down the stocks. According to analysts, investors were on a ‘wait-and-watch-mod’ in recent weeks and the recent developments have given momentum to the stocks. Share price of 154 companies went up on Monday while nine companies suffered loss. A total of 1.47 million units of shares of 163 companies worth Rs 615.04 million were traded in the market this week through 4,469 transactions.