KATHMANDU, Nov 9: Nepal Stock Exchange (Nepse) shot up 34.53 points, or 7.7 percent, over the week, to score the best in the last 29 months, as investor confidence in share market surged due to lack of other investment avenues.
The benchmark index, which opened at 447.98 points on Sunday, closed at 482.51 points on Thursday, the last trading day of the week, as stock prices of most of the listed companies made strong gains. The last time the index had reached this height was on June 10, 2010.
Many investors are thronging stock market once again as banks and financial institutions have started slashing both deposit and lending rates, according to Anjan Poudel, president of Stock Brokers Association of Nepal.
“This, on one hand, has made credit cheaper for those wanting to invest in stock market while, on the other, discouraged depositors to park their money in bank accounts, as returns are now higher on stock market,” Poudel said. “In addition, investors have also started leaving commodities and derivatives markets, as the sector is not regulated and risks are simply too high. Most of these investors are also returning to the stock market because of lack of investment avenues.”
As more investors returned to the stock market, listed companies added Rs 32.62 billion to their market capitalization during the week.
The Nepse rally over the week was led by banking and hydropower sectors, Nepse´s weekly report shows.
Banking sub-index rose 51.76 points, or 13.34 percent, to 439.79 points at the close, as stock prices of leading banks soared. Standard Chartered Bank Nepal, the largest listed bank in terms of market capitalization, for instance, rose 19.78 percent over the week to Rs 2,180 at the close on Thursday. Nabil Bank, which has a market capitalization of Rs 30.53 billion, added Rs 255, or 20.42 percent, to its share value to end at Rs 1,504 on Thursday. Stocks of other leading banks like Everest, Himalayan and Nepal Investment, also scored high during the week.
As investor confidence on commercial banks remained high, the weekly list of top five companies in terms of share trading was completely dominated by these institutions, with Standard Chartered leading the way, followed by Bank of Kathmandu, KIST Bank, Nepal Bangladesh Bank and Nepal Investment Bank.
The week also saw hydropower sector posting hefty gains, with its sub-index surging 63.23 points, or 6.56 percent, to close at 1027 points on Thursday. The rally in the hydropower index was led by Chilime Hydropower, which has a market capitalization of Rs 15.05 billion. The company added Rs 88, or 8.53 percent, to its value to close at Rs 1,120. Stock prices of Butwal Power and Arun Valley Hydropower also rose over the week.
Other sub-indices like insurance, development banks and finance companies also made gains during the week.
Positive contributions made by these listed companies pushed up share transaction volume by 235 percent in the week, as against that of previous week. Nepse´s weekly report shows shares worth Rs 514.05 changed hands during the week.