Shining Days Ahead 
By Rabindra Bhattarai
Stock Market showed a good shine with the change in political scenario in the country. A bearish market since the early March turned bullish increasing the Nepse index by 6.66 points on April 25, the day after the king's announcement of reinstating the House of Representatives. Now this political change is likely to bring a boom in the stock market similar to that seen during early February 2005.
The market increase by so much on a single day despite the 19 days political tension in the country is attributed to the increasing confidence of the investor about the country's economy with the development of sound political environment.
However, this is not only a case of the changing confidence of the investor with change in the political environment. The current increase in the market is influenced by other fundamental factors as well. The third quarter financial reports of the banks and finance companies to be published in the near are expected to show better performance of banks, the major companies in the stock exchange. The banks had reported improved performance also in the previous quarter.
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The bull run before March was based also on the financial results of the companies that reported improved performance in the previous quarter. While most of the companies that conducted their annual general meeting around the second week of January reported better performance during the first four or five months of the current fiscal year over the same period of the previous year, the banks and financial institutions published their second quarter performance reports again showing better figures for this year. The investors are now waiting for the third quarter performance reports in late April.
The bull run in the stock market during February was geared down from early March. Revival was not likely till mid-April.
During February, the market gained by 32.01 points-a record for the entire 12 months preceding it. The Nepse index closed at 341.05 at the end of February up from 309.04 at the close of January.
The major factor behind the market growth was the overdependence of the investors on the growth charts than on the fundamental information about the companies or the overall economy.
The market lost 11 points in the early period of March (March 1-8). This is attributed to the warning from all experts that the market increase was without any basis. While some investors, heeding this warning, started booking profit, thereby increasing the supply of the stocks, a number of primary issues and right share issues came to the market at the same time attracting some investors away from the secondary market. During the month, the market was flooded with over Rs. 550 million worth of primary and right issues. Royal Merchant Banking and Finance Company and Bhajuratna Finance and Saving Company came up with their primary issue whereas Om Finance, Goodwill Finance, Janaki Finance, Central Finance and Taragaon Regency Hotel issued right shares.
Similarly the overall market lost by 9.17 points during early March to early April 2006. This downturn was due to the intensification of the political struggle. Investors liked to wait and watch the course of these developments in the political field before making any decision.
An interesting development in the market during this period was the right issue from Taragaon Regency Hotel Ltd. While its shares with Rs. 100 as the par value are selling at around Rs. 40 in the market, the company is issuing right share of Rs 100 at par. As the financial condition of the hotel is deteriorating, Securities Board should not have given permission to the company to issue the right share. In this situation, it is a foregone conclusion that this issue is going to be unsubscribed by the general investors, thus forcing the promoters to subscribe to these shares.
