February 8: The share market inclined sharply on Tuesday a day after Nepal Rastra Bank (NRB) released data showing overall improvement in macroeconomic indicators.
The secondary market surged by 3.65 percent (76.64 points) on Tuesday to close at 2,177 points.
The central bank had released the Current Macroeconomic and Financial Situation Report of the first six months of current fiscal year on Monday which showed improvements in major indicators such as Balance of Payments (BoP), foreign exchange reserves, remittance inflow among others.
The NRB report showed that the BoP remained at a surplus of Rs 97.10 as of mid-January, which will be sufficient to cover the merchandise and services imports for 9.1 months.
The positive indicators boosted the confidence of investors and the daily turnover increased to Rs 3.362 billion on Tuesday from Rs 1.474 billion day before.
The demand for loans is still low because of the high interest rates but the increase in bank deposits has eased the liquidity crisis and has brought down the CD ratio.
Banks’ borrowing from the central bank has also declined with the improvement of liquidity situation. The bank rate has dropped to 4 percent. The central bank has also issued reverse repo worth Rs 5 billion after the liquidity crisis eased.
The interest on deposits has also dropped since mid-January. This indicates that the interest on loans will also drop in the future. All of these indicators have boosted the confidence of the investors.
On top of it, Finance Minister Bishnu Poudel is positive about removing the limit of Rs 210 million for margin lending.
All these factors have contributed to the sharp rise in in share marker, says Damaru Ballav Ghinire, a long-time investor.
Securities Board of Nepal (SEBON) chair Ramesh Hamal had made a commitment on Monday to work for the development and expansion of the secondary market.
Investors Forum;s former president Chotelal Rauniyar says Tuesday’s surge in share market as normal. The Nepse index had I ncreased to as high as 3200 points some time ago. However, Rauniyar agrees that the share market investors have been buoyed by the recent report of NRB