Stock market hits six-year high of 846.78 points

KATHMANDU, MAY 06 - Nepal Stock Exchange (Nepse) gained 16.07 points on Monday to hit six-year high of 846.78 points, a level not seen since January 28, 2007, when the benchmark index had reached 842.6 points.

The commercial bank sub-index, which rose by 24.3 points, pushed the overall market up, according to stockbrokers. They said investors were diverting their money back to commercial bank shares from hydropower and insurance companies.

After the Securities Board of Nepal asked the commercial banks to convert 19 percent of promoters’ shares into ordinary shares, an oversupply of bank shares had pushed the prices down, prompting investors to put their money in insurance companies which were offering good returns.

“Although a number of banks are yet to convert their promoters’ shares into ordinary shares, investors seem to be firm on investing in banks,” said Narendra Raj Sijapati, president of Nepal Stockbrokers’ Association.

As the banks grew, the insurance sub-index plunged 71.13 points on Monday. However, prices of insurance companies’ shares are still on the higher side, with the sub-index surging by more than 2,000 points in the first nine months of the current fiscal year. The rise in the share prices has been attributed to relatively better dividends as well as rights shares issuance by insurance companies over the period.

Anjan Raj Paudel of Thrive Brokerage House echoed Sijapati. “Insurance share prices have almost peaked. Investors are now taking hydropower, microfinance companies and banks as the alternatives,” said Paudel, expressing hope the market would further rise.

“The current surge is backed by a healthy turnover,” he said. “Moreover, a comfortable liquidity situation in banks, fall in interest rates and CDS and Clearing’s announcement to adopt fully automated clearance have all made investors hopeful about benefitting from the rising prices.”

On Monday, Nepse recorded transactions worth Rs 502.85 million from the trading of 1,656,197 shares. The market capitalisation reached Rs 863.48 billion.