Nepal Stock Exchange (Nepse) index, after observing losses for 13 consecutive trading days, gained 16.41 points to close at 1,477.14 points on Sunday. The index had fallen to an eight month low when the market closed at 1,462.23 points on March 21. 

According to stockbrokers, the rise in the country’s only secondary market reflects a correction in the market at a time when the market has dropped significantly.

 “The gain in the Nespe index is a sign that the market is heading towards stability following significant drop in the market index,” said Anjan Raj Poudel, a stockbroker. 

The market had plunged 111.19 points during the October 23-November 9 trading period. In that three week period, the market had opened at 1,571.92 points and closed at 1,460.73 points.

Last week, the market dipped below 1,500 points, a first in nearly three months. The daily transaction during that period stood at just Rs500 million, down from an average of Rs700 million a day. 

“The secondary market used to draw investors’ attention after the end of festive celebrations. However, this time, the market seems to go in the reverse,” said Poudel. “It could be due to the low incentives offered from investing in stocks of banks, financial institutions and insurance companies, the group which dominates the country’s only secondary market.”

According to Poudel, the banks in particular have already declared their dividend and rights shares before the festival, aiming to meet the capital requirement of Rs8 million as prescribed by the central bank. “Due to the reason, the number of stocks has increased significantly, which results in lower share prices thus leading the market to a downward trend,” Poudel said.

Uncertainty in the results of the upcoming elections, banks being reluctant to reduce the interest rate and tightening in loan against shares are also among the reasons that have been affecting investor confidence. 

On Sunday, almost all the trading groups except trading and manufacturing posted gain in their indices. The insurance sub-group that had shed over 500 points in the 13 day slump period added 118.71 points, the largest gain of all. 

Likewise, commercial banks gained 15.66 points.  The group’s index had plunged over 85 points during the slump period. 

With Nepse index rising, investors also had a single day gain of Rs19.04 billion from the stock market, with market capitalisation escalating to Rs1,714.83 billion from Rs1,695.79 billion. Despite a rise in the index, the turnover remained low, at Rs400.71 million. 

Promoters’ shares of Bank of Kathmandu posted the largest turnover of Rs28.9 million while Sahayogi Bikas Bank observed largest gain of 7.27 percent in its share price.