Vox pop; Is the current market seeking stability? What is the projected picture of NEPSE for the coming months?

It has been quite some time now that the only securities exchange of the country, Nepal Stock Exchange (NEPSE) has been regularly tanking points. The overall market has started showing the sign of depreciation when the nation was reeling under the cloud of political uncertainty just before the elections. Now even after the completion of all the elections and the country moving towards the direction of political stability, the benchmark index at NEPSE hasn’t found strong psychological support to scale up. In fact, the market has shown a reverse trend this time unlike in the previous days when the market used to witnessed some exponential growths after the elections. The biggest reason the market observers and investors have attributed for the current depression is the rise in interest rates of the banking institutions. “If the deposit products are providing safe return of 12%, then why should I consider to bear risk in share market” is the simplest of the arguments that is heard most commonly these days. The existing investors are not willing to redirect their money into share market while the supply of shares is increasing in a pace the market hasn’t seen for ages. As more and more companies are listing their right, bonus and FPO shares to meet the requirement of their regulators, this has added fresh blow to the already bleeding market. Perhaps, due to the effect of bearish market, few ongoing issues have suffered the most in terms of their collections. If not wrong, the ongoing mutual funds of NIC ASIA Bank and Citizens Bank have stand out as the longest floating mutual funds in the history of mutual funds in Nepalese market. The faith of FPO shares which used to command much public attraction previously is no different. The ongoing FPO of BPCL is set to create another history for being the longest floated FPO in the same market where investors had once stood in hours –long queues to apply for the earlier FPOs. When the existing issues are passing through such a hard time, IPOs of big hydropower companies that worth hundreds of crores are eyeing to enter the market with goals of luring already sparse public money. It’s the bitter but equally true reality that number of big companies haven’t had their right shares fully subscribed and are still dilly-dallying to come up with the auction process of those unsubscribed right shares. The banks time and again make public opinions that they are running out of investable funds while the ground reality of the market is very grim as described before. In this situation of despair and uncertainty, investors are hoping some miracle to take place in the stock market so that they can start investing confidently once again. However, the miracles don’t occur overnight in the market and there are certain trends that the investors should read to be optimistic once again. Sharesansar has caught up with few industry observers and investors regarding the current stagnation in the market and to explore whether or not to expect some bullish sentiment at the yearend like that of last year. Deepak Dahal, Investor Currently, the investors are in wait-and-see mood. We have been witnessing sideways movement in NEPSE for few days now. This shows that investors are keenly waiting for a point when the market provides a support point from where the bearish market can change its course. Once the new government is formed, a clear message will go out to the investors that the long-awaited phase of stability and good governance has arrived. Further, the government’s budget expenditure will taking peak at the same time. Both these push factors will provide enough motivation for the investors and of course enough cash to invest into share market. Once the investable funds become available in cheaper price, then the upsurge in the NEPSE index is undeniable. We have seen it recurring when our government generally starts spending pile of cash. This very time as well, we have the omens like that of last year that the market will start picking the pace roughly in the month of Falgun/Chaitra. Few other factors like implementation of full-fledged online trading system at NEPSE will definitely provide further support for the market. All in all, I am very much optimistic. Gokarna Chettri, Mofussil Investor There aren’t enough positive vibes that could life the share market up for the at least coming 6 months. First, it is the tight CCD ratio of the banks which is restricting big flow of money to the share market. Making the situation worst is the government which doesn’t hesitate to spend bulk of budget in administrative expenses at once but has been virtually sleeping over billions of money allocated for capital expenditure. The biggest blow is from the supply side as billions of worth of shares have entered into the market in the first 6 months of the current FY itself. For me, the upcoming 6 months or so is the period to choose the best of the stocks in relatively cheaper price. Instead of expecting for the Bull Run like that of last year, it’s better to hope for the stable market at least for coming 6 months or so. However, the long-term prospect looks bright for the market. Anonymous Investor/Technical Analyst Speaking both fundamentally and technically, I don’t think apt time has arrived for us to become hopeful. It’s the known reality to all to what extent the supply of shares has increased in the market within a year or so. So, until and unless, the regulatory bodies show readiness to extend the market which could absorb the current supply, the market cannot pick up at any cost. The only solution is by increasing demand which can be raised both from inside and outside the country. We shouldn’t also negate the impact of government and its policies towards the share market. Until and unless the government gives up exerting psychological pressure over the investors through VAT or PAN regimes, the share market of Nepal cannot take a significant leap. No matter whoever may form the new government or whatever may be the capital expenditure of the government, the room for upward spiral in the current market seems quite unlikely until the demand and supply gap is filled and the policy obscurity prevails.