Kathmandu. Before Nepal Rastra Bank introduced monetary policy for the current financial year, NEPSE increased by 130 points to 2227 between June 31 and July 7.
Investors believed that the National Bank would remove policy restrictions on the stock market. However, as Rashtra Bank was not very flexible towards the stock market, NEPSE’s rise did not last. The market, which has been on a downward spiral since monetary policy, fell to 1826.23 on October 19.
The NEPSE was at 1852.11 points on December 22, the day before the first quarterly review of monetary policy by the central bank. The National Bank became somewhat flexible towards the market through the review of monetary policy. After that, the rising NEPSE reached 2141.87 points on December 4. The enthusiasm seen in the market from the first quarter review did not last long.
The market fell again and fell to 2022 on December 22. On January 2, the NEPSE reached its highest point since July at 2175 points. The half-yearly review of monetary policy came in mid-January. But positive enthusiasm was not seen in NEPSE. The market, which has been falling continuously, reached the point of 2111 with the change of finance minister in February.
After reaching 2100 points, NEPSE fell to 1958 points on Baisakh 24. The RBI adopted some flexibility through the third quarterly review of monetary policy on May 4. After that, NEPSE increased for 4 consecutive days and reached 2131 points.
The market, which reached its highest point since last January, fell by 22.14 points to 2109 points on Sunday. After the review of the monetary policy, the market has decreased on Sunday. This can be seen as a correction,’ said a merchant banker, ‘there is a positive sentiment in the market. It seems that the market will increase after the confidence of investors increases.’
Now the banking system is flooded with liquidity. Interest rates are starting to come in single digits. Liquidity and low interest rates are considered to be favorable indicators for the stock market.
However, despite favorable indicators, the market has not been able to grow. NEPSE has been hovering around 1800-2200 for the last two years.
After a long period of contraction in the overall domestic economy, the National Bank has been adopting flexibility in installments since the current year due to policy tightening. Some policy restrictions remain.
Investors argue that the policy of limit and risk burden imposed on share mortgage loans has affected the market. Experts say that some investors are diverting from the stock market because it is impossible to predict when the policies will change.
Analyst Analraj Bhattarai says that institutional and large investors have not been able to attract institutional and large investors when they are driven by the policy of production and the company’s business.
“For institutional and big investors to come to the market, there should be a policy that can be estimated and analyzed,” he said, “but when it is not predictable, they divert to other areas.” Aggressively big investors are not seen as they should be.’
Finance Minister Barshman Pun said that he will work for the reform of the stock market while taking charge last February. He has been publicly saying that he will bring a loose monetary policy in harmony with the financial policy. Banks have not been able to increase credit investment due to lack of demand for loans.
Due to lack of increase in demand, on the one hand, there is no loan investment and on the other hand, the interest rate is continuously decreasing. That is why, even if the demand in the market is to increase, the National Bank is in favor of easing the policies.
Experts say that investors are waiting for the budget of the next financial year and the policy taken by the National Bank. “The market is now in pre-budget syndrome. Income tax, capital gains tax are linked,’ said Bhattarai, adding that the government will increase taxes due to revenue pressure. The budget gives the lead.’
