Tuesday, June 14, 2016

Intra-day transaction hits record Rs 2.2 billion

Transaction sailed past the Rs 2-billion mark for the first time in the history of domestic share market today to hit an all-time high of Rs 2.2 billion.
Likewise, insurance companies and banks propelled the stock market not only to record the highest intra-day transaction today at the Nepal Stock Exchange (Nepse) but also pushed Nepse index to a record high of 1,614.15 points, up by 4.56 points or 0.28 per cent from yesterday.
With bullish trend in recent months, the stock market has been observing daily transactions of over Rs 1 billion for the last 20 days.
The stock market analysts attribute high demand for insurance and microfinance stocks in particular coupled with excess liquidity with banks and financial institutions for the upswing in the market.
Of the total trading volume, some 22 per cent or Rs 400 million transaction was recorded pf the promoter shares of Nepal Insurance Company. Likewise, large volumes of shares of Nepal Bangladesh Bank, Rural Microfinance Development Centre, Standard Chartered Bank Nepal and Everest Bank also traded hands today.
Similarly, biggest gainers of today were Bhargav Bikash Bank, Bottlers Nepal (Terai), Vijaya Laghubitta Bittiya Sanstha, Butwal Power Company and ILFCO Microfinance Bittiya Sanstha.
The rush to buy shares of insurance companies and also banks and financial institutions started after the Insurance Board and central bank instructed them to jack up their capital base. The banks have to increase their paid up capital to Rs 8 billion, whereas the Insurance board has asked life insurance companies to increase their capital base to Rs 5 billion from current Rs 500 million and non-life insurance companies to Rs 4 billion from current Rs 250 million.
Likewise, the market capitalisation also reached Rs 1,740 billion today, which is almost 80 per cent of the gross domestic production (GDP) of the country.
The share market trading that used to hover around million rupees per day has lately started to skyrocket because of fully automated share trading that fastened the securities ownership transfer and clearance services, the analysts claim.
The use of dematerialised stocks has enabled investors, who buy shares in bulk, to slice them in smaller portions before selling and profit booking, they said, adding that earlier investors used to buy shares – paper scrips – in bulk, used to pay split charges and wait for almost a month before selling them in small volumes. "With the introduction of dematerialised stocks, investors do not have to wait for long time to sell after splitting them, which has helped raise trading volume and transactions both.

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