Nepse jumps 29 points on monetary policy measures

- POST REPORT, Kathmandu

Jul 20, 2014-

Nepal Stock Exchange (Nepse) jumped 29.08 points to 1,074.97 points on Sunday, a day after the Nepal Rastra Bank (NRB) unveiled the monetary policy for fiscal year 2014-15. The market closed along with the surge in the benchmark index, the market turnover also surged to more than Rs 966 million, which stockbrokers claimed record-high single-day turnover.

Indices of almost all the groups posted gains. The insurance group, up 84.04 points, lead the gainers’ list. It was followed by commercial banks (up 35.87 points). Except for ‘others’ and trading, all other sub-indices posted double-digit gains.

The massive surge in the market comes despite the fact that the monetary policy has talked about tightening margin lending. “The monetary policy’s decision to hike paid-up capital requirement for micro-finance institutions (MFIs) to be established in banked areas, affected the market,” said Anjan Raj Paudel, managing director of Thrive Brokerage House.

On Sunday, most of the “D” class financial institutions, and development banks, posted gains. For of Sunday’s top-five gainers were microfinance institutions, while one was development bank. Chhimek Laghubitta Bikas Bank, up 10 points, was the biggest gainer. Paudel added good returns offered by microfinance institutions also attracted investors.

Narendra Raj Sijapati, president of Nepal Stockbrokers’ Association, attributed the rise in the Nepse index to the monetary policy.

“The central bank taking stringent policy regarding the paid-up capital requirement contributed to the rise of the commercial bank sub-index,” he said.

The monetary policy has barred BFIs failing to increase their paid-up capital to the required level by mid-July 2014 from expanding branches and distributing cash dividend. A certain limit will be imposed on deposit mobilisation and credit disbursement too, according to the policy. This prevision will encourage such BFIs to issue bonus and rights shares to boost their capital.

NRB said 23 commercial banks, 62 development banks and 40 finance companies have only fulfilled the capital requirement as of mid-July.

Published: 21-07-2014 09:15

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