The benchmark index gained 5.58 points to close at 1,289.52 points on Tuesday. The market is on an upward journey for the past few months as investors, buoyed by positive political developments and the better-than-expected performance of bank and financial institutions in the second quarter of 2015/16, are putting their money into securities.According to stock brokers, the bull-run in the secondary market is reflecting jubilant mood of investors. They also say that the recent announcement by Nepal Rastra Bank (NRB) Governor about the preparation to increase paid-up capital requirement for microfinance institutions has also boosted the confidence of investors.
"While there was some doubts that the central bank might extend deadline for BFIs to meet the new capital requirement, the governor has sent a clear signal that the deadline will not be extended," a stock broker told Republica. "The expectation that BFIs will issue stock dividend and rights shares to meet the new paid-up capital have propelled the market to a new high," he added.
Falling interest rates of BFIs has also driven the stock market up. As the BFIs are grappled with excess liquidity, they are scrambling to lower interest rates. "Investors are getting easy and cheaper financing from BFIs to invest in the secondary market. Many investors are also finding it profitable to put money into securities rather than stashing cash in the BFIs that give as little as 3 percent interest rates," Narendra Sijapati, former president of Stock Brokers Association of Nepal (SBAN), said.
He also attributed the surge in the stock market to better-than-expected performance of BFIs in the second quarter. "Against the expectation that the financial health of the BFIs has deteriorated in the aftermath of the recent earthquake, Tarai turmoil and economic blockade, their report in the second quarter show that they have managed to weather such problems. It is because of this that investors are after securities of BFIs which dominate the secondary market," he added.
Manufacturing and Processing was the biggest gainer of the week as its sub-index jumped 20.76 points to close at 2,019.54 points. Banking, Development Bank, Finance, Insurance and Others groups also ended the day on the green zone. Hydropower and Hotels groups, however, logged loss in the third trading day of the week.
A total of 1.05 million units of shares of 123 companies worth Rs 512.72 million were traded in the market through 2,552 transactions on Tuesday.
NIBL TO REFUND PROMOTER SUBSCRIBERS' MONEY
Nepal Investment Bank Ltd (NIBL) has said that it will refund the money of promoter shareholders and their immediate kin subscribing its Further Public Offering (FPO).
The bank took the decision after Securities Board of Nepal (Sebon) clarified that promoter shareholders and their immediate kin are prohibited from subscribing further issue of share capital.
Publishing a notice on Monday, Citizens Investment Trust -- the issue manager for the FPO, said that it will start refunding the amount from March 10. It has also notified such subscribers to contact the collection center where they had applied for shares with their receipt slip.
According to the Sebon, promoters, board of directors, managing director and their family members are not allowed to subscribe FPO.
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