Analysis of Recent Surge in NEPSE Index: Diverse Sectors Showcased Impressive Gains Across Indices

The Nepal Stock Exchange (NEPSE) has recently experienced a noteworthy upswing, particularly in the aftermath of the first quarterly monetary policy review on Mangsir 22. Over the last eight trading days, the NEPSE Index has surged impressively, ascending from the 1800 levels to the 2100 levels, marking a significant gain of 253.68 points.

A pivotal factor contributing to the surge is the revision in the risk weight assigned to real estate by banks and financial institutions. The risk weight for all types of real estate held by these entities has been reduced, leading to increased investor confidence. Notably, the risk associated with share mortgage loans exceeding Rs. 50 lakh has also been lowered to 125% from the previous 150%, further stimulating market sentiments.

The recent adjustments in interest rates, as outlined in the Nepal Rastra Bank (NRB) monetary policy review, have played a significant role in the NEPSE surge. The bank rate has been reduced from 7.5% to 7%, the policy rate has seen a decrease from 6.5% to 5.5%, and the deposit collection rate has been maintained at 3.0%. A considerable number of BFIs have adjusted their FD rates to single digits, aligning with the broader trend set by the Nepal Rastra Bank's monetary policy review. These reductions in interest rates contribute to a favorable economic environment, fostering investor optimism.

Another noteworthy reason is the decrease in the Credit-Deposit (CD) ratio to 79. The concept of Fear of Missing Out (FOMO) has played a pivotal role in driving the NEPSE surge. The market has witnessed a one-way trajectory, creating a fear of missing potential buying opportunities. This collective sentiment has triggered a surge in market activity as investors seek to capitalize on the prevailing market conditions.

This article aims to analyze the fluctuations in the NEPSE Index and its sub-indices in one month.

Over the span of a month, the NEPSE index exhibited a robust increase of 13.65%, accompanied by a remarkable 401.24% positive change in turnover values. Notably, the Hotels and Tourism Index experienced the most substantial positive shift, surging by 23.64%. Starting at 4,924.48 levels, the index soared to 6,088.43 levels within the month. Following closely behind, the Hydropower Index, Investment Index, and Life Insurance Index also witnessed significant upswings of 21.26%, 18.56%, and 18.19%, respectively.

Certainly, let's delve into the sector-wise performance of the top five companies in each sector that have exhibited the most substantial gains over the past month.

Banking Index

In the Banking Index, Everest Bank has emerged as the frontrunner with a remarkable surge of 18.21%. The Last Traded Price (LTP) for Everest Bank stands at Rs. 546 as of December 19th, reflecting a substantial increase from Rs. 461.9 just a month ago. Following closely, Siddhartha Bank recorded a noteworthy price change of 16.38%, contributing to the dynamic shifts observed in the Banking sector.

Development Bank Index

Within the Development Bank Index, Karnali Development Bank has exhibited the most significant upswing, boasting a surge of 35.67%. The LTP for Karnali Development Bank currently stands at Rs. 341.9 as of December 19th, compared to Rs. 252 a month ago. Sindhu Bikas Bank follows suit with a commendable price change of 25.05%.

Finance Index

Turning to the Finance Companies, Reliance Finance has led the way with the highest surge in the Finance Index at 28.23%. As of December 19th, the LTP for Reliance Finance stands at Rs. 382, witnessing a substantial increase from Rs. 297.90 a month ago. Following closely, Samriddhi Finance Company has recorded an impressive price change of 26.77%.

Hotels And Tourism Index

In the realm of the Hotels and Tourism Index, City Hotels has emerged as the frontrunner, experiencing an impressive surge of 34.06%. The Last Traded Price (LTP) for City Hotels now stands at Rs. 726.9 as of December 19th, reflecting a substantial increase from Rs. 542.2 a month ago. Following closely, Taragaon Regency Hotels recorded a notable price change of 27.79%. Given the limited number of companies in the Hotel Index (six in total), these significant shifts underscore the resilience and growth potential within the hospitality sector.

HydroPower Index

Within the Hydropower Index, Molung Hydropower Company stands out with the highest surge of 96.37%. The LTP for Molung Hydropower Company is now Rs. 379 as of December 19th, up from Rs. 193 a month ago. Following closely, Three Star Hydropower has recorded a substantial price change of 55.17%. 

Investment Index

The Investment Index witnessed a standout performance from Hathway Investment, a newly listed company that issued an IPO at Rs. 50 per share. Hathway Investment experienced an exceptional surge of 131.18%, with the LTP reaching Rs. 825.3 as of December 19th, compared to Rs. 357 a month ago. Emerging Nepal follows suit with a commendable price change of 22.26%.

Life Insurance

Turning to the Life Insurance Index, Reliable Nepal Life Insurance Company takes the lead with the highest surge of 42.17%. The LTP for Reliable Nepal Life Insurance Company stands at Rs. 590 as of December 19th, up from Rs. 415 a month ago. Following closely, Sun Nepal Life Insurance Company recorded a notable price change of 39.64%. 

Manufacturing And Processing

In the Manufacturing and Processing Index, Bottlers Nepal Limited (Terai) has shown an impressive surge of 94.85%, with the LTP reaching Rs. 4,780.30 as of December 19th, compared to Rs. 2,453.30 a month ago. Following closely, Sonapur Minerals and Oil recorded a substantial price change of 67.34%.

Microfinance Index

Within the Microfinance Index, Dhaulagiri Laghubitta Bittiya Sanstha has demonstrated an extraordinary surge of 50.41%. The LTP for DLBS stands at Rs. 887.4 as of December 19th, compared to Rs. 590 a month ago. Following closely, Samaj Laghubitta Bittiya Sanstha recorded a substantial price change of 47.05%.

Mutual Fund

Citizens Mutual Fund 2 has demonstrated the highest surge, marking an impressive 19.71% increase. The Last Traded Price (LTP) for Citizens Mutual Fund 2 is now Rs. 8.26 as of December 19th, up from Rs. 6.90 a month ago. Following closely, Kumari Equity Fund recorded a substantial price change of 18.69%.

Non-Life Insurance

Turning to the Non-Life Insurance Index, Sanima GIC Insurance takes the lead with the highest surge of 34.69%. The LTP for Sanima GIC Insurance stands at Rs. 573.8 as of December 19th, compared to Rs. 426 a month ago. Following closely, Himalayan Everest Insurance recorded a notable price change of 32.29%.

Others Index

In the Others Index, where only four companies are listed, Nepal Republic Media has witnessed the highest surge, exhibiting a remarkable increase of 81.27%. The LTP for Nepal Republic Media is now Rs. 386.1 as of December 19th, up from Rs. 213 a month ago. Following behind, Muktinath Krishi Company recorded a substantial price change of 46.25%. 

Trading Index

Within the Trading Index, Salt Trading Company has led with the highest surge, boasting a growth of 10%. The LTP for Salt Trading Company is now Rs. 5,335 as of December 19th, compared to Rs. 4,850 a month ago. Following closely, Bishal Bazar Company recorded a notable price change of 6.92%.

All the data are generated from SSpro Software. To learn more about the software, click on the link below

SSpro