EXPERT SPEAKS: Market will grow in days ahead. I’ll tell you why
Thu, Oct 16, 2014 12:00 AM on Mutual Fund, Mutual Fund, Experts Speak,
Shreejesh Ghimire
CEO, NMB Capital Limited
Though the market was sluggish in the initial days of trading following the Dashain holidays, the demand is rising if we look at the trading for the past two days, especially today. The festive season plus some confusion regarding the CDS system affected the market a bit. Another reason could be reduced liquidity in the banking system owing to three factors: a) credit demand due to the festive season, b) the central bank’s recent move to mop up Rs 45 arba from the system and c) credit demand in the wake of paddy and maize harvest season. Nevertheless, if we look at the market trend for the past 15 years or so, we realize that the share market has always been somewhat affected by decreased liquidity in the wake of Dashain and Tihar, and the harvest season. But then the liquidity situation is not so tight that the investors need to worry. For instance, the inter-banking rate has not crossed even 1.5 percent.
What is more encouraging is that both technically as well as fundamentally, the stock market is poised to grow. We don’t see any reason as to why the profitability of the listed companies should decrease. CDS system is being implemented, and liquidity is here to stay for quite some time. Though there are some differences among the major political parties, they are striving to forge consensus. Hence, in the final analysis, I think the market will continue to grow, though we may or may not witness immediate bull. Talking about the market for the next six months, I don’t see any considerable reason why the market should fall.
Though the market was sluggish in the initial days of trading following the Dashain holidays, the demand is rising if we look at the trading for the past two days, especially today. The festive season plus some confusion regarding the CDS system affected the market a bit. Another reason could be reduced liquidity in the banking system owing to three factors: a) credit demand due to the festive season, b) the central bank’s recent move to mop up Rs 45 arba from the system and c) credit demand in the wake of paddy and maize harvest season. Nevertheless, if we look at the market trend for the past 15 years or so, we realize that the share market has always been somewhat affected by decreased liquidity in the wake of Dashain and Tihar, and the harvest season. But then the liquidity situation is not so tight that the investors need to worry. For instance, the inter-banking rate has not crossed even 1.5 percent.
What is more encouraging is that both technically as well as fundamentally, the stock market is poised to grow. We don’t see any reason as to why the profitability of the listed companies should decrease. CDS system is being implemented, and liquidity is here to stay for quite some time. Though there are some differences among the major political parties, they are striving to forge consensus. Hence, in the final analysis, I think the market will continue to grow, though we may or may not witness immediate bull. Talking about the market for the next six months, I don’t see any considerable reason why the market should fall.
