NEPSE index increased by 78. 17 points today, which will bring the end of the week in the plus and provide further stimulus to the spirits of investors. The benchmark index ended the day at 2,187. 45 points, its highest level in more than six months due to traders’ optimism in positive economic data and government policies.
The trading activity was also good with more than 15 million shares traded with a value of over 6 billion Nepali rupees. Banking stocks were on recovery trail as most of the major banks touched their upper circuits.
Experts have pointed out the following factors as the key to the market’s recent positive trends. The recent government’s plan to increase infrastructure expenditure has given a positive signal to the economy. Also, early signs of an improvement in the flows of remittances have given confidence to the external financial situation of the country.
The Nepal Rastra Bank has also helped the market through its continued approach of not tightening its monetary policy. Due to this, investors are willing to invest in equities because they can be able to get good returns with the interest rates still being low.
Market interest from the foreign investors has however increased in the recent weeks with net buying recorded for the third week in a row. This has been regarded as a positive signal on the ability of Nepal on the economic front.
But some analysts are cautious, they pointed out that while the price of the shares in the market has been on the rise, it may not be driven by the fundamentals. They caution that it could be due for a correction if the rest of the economy does not turn around.
This has again raised question on the need for having a better regulation of the capital market in Nepal due to heightened stock prices. There are voices of policymakers, who have demanded for regulation to prevent high levels of speculation and safeguard the small investors.
The NEPSE has performed well at a time when the Nepalese economy is gradually coming out of the effects of the COVID-19 pandemic. Official statistics provided by the government of the republic show positive dynamics in the spheres like agriculture, construction, and tourism.
When the trading week came to an end, most of the investors were looking forward to more improvement. Still the problems persist; there is still political instability in the country and the country is still prone to outside influences. The next few weeks will tell whether it is possible to continue the increase or it is only a short-term surge.
