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Market Analysis
NEPSE gains while entering 18 years of service

By R.K.Regmee

R.K.RegmeeThe Nepal Stock Exchange recorded gain of 4.50 points in the past week when it turned 18. Interpreting the positive performance in emotional note in view of establishment anniversary of NEPSE, analysts termed the 0.57 % growth as "birthday gift" amidst times of gloom in investment sector.

It was actually the result of the investors' deliberate financial move to avoid the second quarter margin call from banks and financial institutions, they explained finding no other financial reasons to boost the market. Various other factors - financial and non-financial - had remained rather static during the period while cautiously watching how indecisive prime ministerial poll in parliament ends and how smoothly the Special Committee takes over the responsibility of UNMIN to supervise Maoist combatants and weapons mid-January.

NEPSE-phenomenon during the period first displayed positive spirit for three days while going up from Sunday's 398.26 points, to 399.47 on Monday and 400.67 on Tuesday. Then it declined to 400.20 points on Wednesday to go up again, although nominally, to settle at 402.75 points on Thursday.

Market turnover, however, did not show up corresponding improvement in the NEPSE floor. Fall in the number of shares in the trading floor was instrumental in making the turnover decline by 14.88 %. Investors traded 379,628 shares for Rs. 96.53 million in the market during the period as against 113.41 million in the previous week.

The Hydropower sector gained remarkably, putting on 13.34 points while commercial Banks and Development Banks recorded positive performance of 8.65 points and 0.22 points respectively. Among the losers were Hotel, Insurance, and Finance sector. The performance of sectors related to manufacturing, processing and trading remained rather static.

Financial literacy

Keeping in view the deteriorating situation in investment climate in the country and lack of motivation in the capital market, an interaction programme on Improving Financial Literacy in Nepal was organized on the occasion of the 18th anniversary of NEPSE in the past week. A number of factors related to the recent disappointing performance of the secondary market cropped up during the discussion.

Although talking financial literacy 17 years after the establishment of NEPSE sounds somewhat uneasy, it is actually today's need of Nepali economy in which investors and investment institutions do not know the technique of using capital market for mobilizing resources. The literacy could be instrumental in creating an investment friendly culture in the country and providing motivation for investors in the capital market.

Office bearers, investors and NEPSE stakeholders were one in voicing the need to be positive towards the capital market. They drew a line of demarcation between speculation and investment in the stock market and underlined the need to boost the latter in the interest of not only NEPSE but of Nepali economy. "A climate friendly for investment should be created," they said urging politicos to stabilize politics for allowing economic policies to produce positive impact on investment. Nepalnews.com Jan. 16 2011

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