EXPERTS SPEAK: Post election - What kind of changes might occur in the stock market?

The recently held election on December 7, 2017 has brought optimism among general public for the economic development of the country. The economy of the nation and stock market are often considered to be interrelated. The positive change in the economy, often, shows positivity in the market psychology. In order to understand what position the market may take, we talked with few experts in the market. Let us see, what the experts have to say. Expert’s opinion on “With the recently held election, public in Nepal are hoping for a stable government (majority government). In this scenario, what kind of changes might occur in the stock market?” Dipendra Agarwal, Board of Director of Mega Bank Nepal Limited: Agarwal believes that with the ongoing election result update, it is likely that the result will favor the left alliances (Bam Gathabandhan). If this becomes possible, there will establishment of permanent government in the country. The history of Nepali politics is quite evident to frequent changes in government; however, with the formulation of the permanent government, country can look for political stability. Political stability is a perquisite for the economic development. Furthermore, it is likely that the economy will see number of development activities taking place. The election update would boost economic activity along with flourish in business and hence, construct a positive scenario for stock market. Besides, the economy is likely to incur development expenses. Thus, the psychology of the market might take a positive stand for both the short and long term market. In addition to this, UML has a positive take in the stock market so; we look forward for the development in the sector. Santosh Bajgain, Investor and Analyst: The stock market is often seen to overreact at times of new events as election and festival. With the approach of communism, in the short term, the investors may panic in response to the election result. However, the concerned parties do not hold an extreme communism viewpoint and thus, the investors do not need to worry. However, in the long term, the stock market may take its positive pace. Sandeep Bikram Rana, Stock Market Analyst: The stock market functioning in Nepal is politically dominant. The market is seen to behave rationally when the political situation brings positive aspirations in the general public. In last two decades, the parliament has disappointed citizens with its frequent change in the government. Thus, the election has brought rays of hope among the public in regards to the stability in government. Although the democratic are defeated yet the establishment of majority government will take place. This, therefore, is a positive outlook to the stock market pioneers as well as beginners. However, the market may be volatile in the short run and reflect positively in the long run. There is a hope that the newly elected government will form favourable policies with respect to the regulation of capital market. This, in fact, can be a golden period for investors to take stand on their investment decision.  Nanda Kishore Mundara, Broker no. 28: Mundara has also similar take on market behavior. He believes that if a majority government can benefit for the development of the whole country, it is of no doubt that the stock market will also be beneficial. No matter what the election results are, the stock market aims for a government should be stable in nature. A stable government can introduce policies that can be advantageous to the capital market and hence, will be beneficial for stock market.