NEPSE Index hits record 1075.34pts

The Nepal Stock Exchange NEPSE Index touched a record high on Monday’s trading, as better financial results of the listed companies induced investors to become further speculative.

The index ended at 1075.34 points Monday, recording rising 27.67 points. The previous record high of 1,064.09 points was set on December 17, 2007. The share market has been making relentless rises in recent weeks.

The investors argued that they were picking up shares at higher prices due to improved profits of the companies in the Fiscal Year 2007/08 -- shown in published balance sheets for the year. But, market watchers said the stock market is heading towards ‘some sort of crash’, as the boom is mainly coming from speculative buying.

Today’s increment in stock prices led to addition of nearly nine billion rupees to the market in terms of paper money. Its capitalization -- value of all outstanding shares --reached Rs 415 billion, up from around Rs 404 billion. Major gainers were share holders of Standard Chartered Bank, Nabil Bank and Chilime Hydropower.

Attempting to cool the soaring stocks prices down, NEPSE closed the market for half an hour at around 1 pm after the index rose by 20 points. Half an hour after in trading was resumed, the market’s total gain crossed 25 points, leading NEPSE to suspend trading for the remaining day.

NEPSE has regulations that force it to suspend trading when the index makes gains or losses of over 25 points in a single day transaction.

Navraj Pokharel, a stock broker, said the market is entering into an inflated zone, heightening risks that it may meet with an ‘accident’, when it reaches a new turning point. “Now, old investors are selling shares, getting good money, while new investors are making entry seeing profits made by others,” he said. “Investors are buying shares on heavy speculation, as companies are bringing out their balance sheets for the last fiscal year.”
Source: eKantipur