Laxmi Capital News
Interest rates, new govt push Nepse down 27 points

Nepal Stock Exchange (Nepse)benchmark index plunged 26.92 points this week to close at 1,386.98 points onThursday--the last trading day of the week. 

A total of 4.25 million shares of176 companies worth Rs 1.7 billion were traded in the market this week through18,604 transactions. 

Analysts have said that theincrease in interest rates of the bank and financial institutions (BFIs), inthe wake of shortage of lendable fund,  was a major reason behind therapid fall of stocks. Interest rates have not shown any sign of correction yetas the BFIs still grapple with the mismatch in growths of deposit andloans. 

“The interest rates and stockshave an inverse relation. When rates rise, stock prices fall. While rates areon a downward trend, stocks go up,” said a stock broker. 

The stock market correction isalso attributed to the weak confidence of investors in the new government ledby CPN-UML. 

“Stocks investors seem to loathecommunist government as they believe that such government is not helpful towardthe growth of capital market,” said the broker. “Also, there are rumors thatthe left government will tighten the stock market due to a perception that theinvestment in stocks are speculative,” he added. 

The benchmark index brieflyshowed a positive response immediately after Oli was sworn in as the new primeminister, it has failed to maintain investors' confidence. The announcement ofthe unification of CPN-UML with CPN (Maoist-Center) is also sending jittersamong investors, according to observers.

All trading groups ended in thered zone this week. Insurance was the highest loser of the week as itssub-index dived 182.2 points to close at 6,998.96 points. Hydropower groupended 47 points lower at 1,742.11 points. Microfinance group followed the suit.Its sub-index fell 45.89 points and closed at 1,649.53 points. Sub-indices ofDevelopment Bank and Hotels went down 27.71 points and 26.41 points,respectively, settling at 1,579.54 points and 2,039.4 points. Banking, theheavyweight group, also shed 24.66 points to finish at 1,214.89 points.Manufacturing and processing group registered a loss of 18 points and closed at2,467.35 points. Sub-indices of Finance and 'Trading' group went down 8.18points and 3.04 points, respectively, to close at 701.43 points and 219.92points. 'Others' group ended 1.13 points lower at 752.39 points. 

Nepal Life Insurance Company Ltdremained at the top of the list of companies in terms of turnover (Rs 112.06million). However, Century Commercial Bank Ltd topped the companies in terms ofnumber of traded shares (364,000 units) and number of transactions(1,121). 

According to the Nepse, 130million units of Sanima Equity Fund have been listed for trading in thesecondary market this week.

Source: MyRepublica 25thFebruary 2018

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