Insurance stocks took off on Sunday following the disclosure by the Insurance Board that insurance companies would have to increase their paid-up capital.

The Nepal Stock Exchange (Nepse) leapt 79.47 points to close at 1,667.11.

The circuit breaker was imposed twice, and trading was eventually closed for the rest of the day after the market rose more than 5 percent. 

Trading was suspended for the first time at 12:57pm after the index rose 4 percent. When trading resumed at 1:27pm, prices climbed within five minutes of the resumption of trading, and the stock market was shut down.  

Unveiling a new insurance policy on Friday, the Insurance Board announced that insurance companies would have to raise their paid-up capital fourfold, from Rs500 million to Rs2 billion.

Similarly, non-life insurers will have to boost their paid-up capital from Rs250 million to Rs1 billion.

The market has seen a bull trend for the last two weeks. Reports that the Insurance Board could make insurance companies increase their capital had pushed up their share prices significantly. 

The insurance index has gained around 2,500 points in the last three weeks. On Sunday, the insurance index rose 733.37 points to close at 8,584.36 points.

Santosh Mainali, general secretary of the Stockbrokers’ Association of Nepal, said the newly announced capital requirement had mainly affected trading on secondary market on Sunday. “Many investors rushed to buy shares of insurance companies with expectations of bonus and rights shares being issued,” he added.

Share prices of 21 insurance companies among the 29 listed rose. Rastriya Beema Company recorded the largest increase. Its promoter shares gained Rs1,479 to reach Rs16,269. Likewise, its ordinary shares rose Rs1,345 to Rs14,795. 

Along with insurance companies, other stocks also rose.

The development bank index surged 88.29 points to close at 1,864.76 points. Hotels, commercial banks and hydropower companies also gained 87.13 points, 70.6 points and 68.91 points respectively.  The total trading volume was recorded at Rs964.24 million.

National Life Insurance Company witnessed a turnover of Rs142.73 million. Share prices rose Rs90 billion in total, with market capitalisation reaching Rs1,894.42 billion. 

Major Gainers

Companies    Gain    Closing Price

Rastriya Beema Company (promoter shares)     Rs1,479    Rs16,269 

Rastriya Beema Company (ordinary shares)     Rs1,345    Rs14,795

Life insurance Company Nepal    Rs260    Rs2,860

National Life Insurance    Rs232    Rs2,557

Shikhar Insurance     Rs210    Rs2,500

Nepal Life Insurance    Rs206    Rs2,729