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NEPSE Reached Yet Another Highest Point

NEPSE Index Above 1,500 in Intraday Trading

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NEPSE Reached Yet Another Highest Point
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May 20: Nepal Stock Exchange (NEPSE) index has made yet another highest record on Thursday. NEPSE made the highest record of 1,507 points in Intraday Trading which dropped to 1,499.32 points in market closing.

According to the sources, the present expansion of market could be attributed to CDS and Clearing Limited (CDSC). “After many years of initiation, mandatory D-mat trading has started this year. Currently, investors do not need to wait for months for share trading and receive money. In third day of transaction, investors receive share and money,” Narendra Raj Sijapati, former Chairman of Brokers’ Association says. While CDSC plays a dormant part in increase of NEPSE, it has direct support in growth of share trading.

“Investors re- invest the money in the market as soon as they receive their money back after share trading. Therefore, CDSC not only helps in share trading but also helps to increase NEPSE index indirectly,” says an analyst. As investors are being attuned towards the mechanism, trading in the share market is increasing.

Mandatory D-mat trading was started in last January selecting companies in instalments. Since last April 27, trading of physical share certificate has closed completely. Since then, size of the market has increased significantly.  The trading amount which used to total Rs 500 million daily one year ago has increased to Rs 1 billion daily at present. This has contributed in growth of investors’ assets to Rs 1600billion.

Excess liquidity in the market has also contributed in increase of NEPSE index. “Presently, investors are getting loans at 6.5 percent interest rate on share collateral. Those who did not issued such loans in past are expanding their investment in the market aggressively,” says Sijapati.  According to the Nepal Rastra Bank’s nine months data, banks and financial institutions (BFIs) have invested more than Rs 35 billion loan in the review period of current FY.  Although market had witnessed tight liquidity some time ago, investors are getting easy loan due to excess liquidity at the moment.  As BFIs are in the process of paid-up capital increment and also there are rumours of paid-up capital increment of insurance and microfinance companies, market price of these companies are rising significantly.

Meanwhile, a tool of technical analysis, RSI indicator, shows market in Neutral zone (scale 68) and balanced share transactions. Whereas, AD ratio of overall transactions of Thursday shows bullish trend in the market. 

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