With the double-digit growth in Nepse index, Nepse had to impose circuit break - a temporary suspension of transactions put in place to control unnatural fluctuation of share prices during the trading - three times during the trading session.[break]
As per the existing provision, Nepse can announce circuit break for 15 minutes if the index surges over 3 percent in the first hour, for 30 minutes in the second hour if Nepse rises over 4 percent and for the whole transaction period if Nepse goes up more than 5 percent in the third hour of the transaction session.
However, analysts are skeptical about the sustainability of the surge in Nepse index amid exorbitant interest rates in bank lending and confusion over fate of the peace accord.
“This surge in Nepse index is based on market sentiment backed by positive political development. We can´t expect continued growth in coming days given the high interest rates in banks and absence of new investment in stock market,” said Nanda Kishore Mundada, former president of Stock Brokers Association of Nepal (SBAN).
Stating that the rise in Nepse is temporary, Anjan Raj Poudel, president of SBAN, said stock market can´t revive until bank interest rates are not moderated and Central Depository System (CDS) - online trading system - is not enforced.
Stock Analyst Rabindra Bhattrarai said investors are on a ´wait and watch´ mode despite positive political development in the country. The current slowdown in Nepse index climaxed to a six-year low to 292 points in June.
Meanwhile, a delegation from SBAN met Babu Ram Shrestha, chairman of Securities Board of Nepal (Sebon), and apprised him of the current situation in the capital market.
According to Poudel, the delegation demanded from the Sebon chief to allow brokers to work as Depository Participant (DP) without any condition and prioritize implementation of Mutual Fund and CDS to boost trading in stock market.
Related story
Daily Commentary: Nepse triggers positive circuit breaker for a...
-1200x560-1779450784.webp)