Nepse starts new FY on a dismal note. It plunged 8.97 points to close at 509.3 points on Tuesday

The capital market started the new fiscal year on a dismal note. The Nepal Stock Exchange (Nepse) index plunged 8.97 points to close at 509.3 points on Tuesday, the first trading day of fiscal year 2013-14.
The decline has been attributed to the government’s failure to address major issues relating to the capital market in the budget.
Anjan Raj Poudel, past president of Nepal Stockbrokers’ Association said investors had hoped for a reduction in the capital gain tax on stocks, which didn’t happen. Traders had been demanding the government reduce the capital gain tax from the existing 5 percent or to replace it with transaction tax.

Poudel said banks’ delay in disbursing margin loans is also affecting the market. “But the timely introduction of the budget has made investors hopeful,” he said, adding investors, however, are still skeptical about the political consensus.
As far as last year’s performance was concerned, Nepse fairly good run.
The benchmark index gained 128.55 points (up 32.99 percent) last year. It also reached its three-year of 555.93 points on February 17, 2013.
The last fiscal year also saw a huge increment (98.12 percent) in the market turnover. Nepse recorded a turnover of Rs 20.13 billion in the last fiscal year, compare to Rs 10.16 billion in 20110-12.
Stock analyst Rabindra Bhattarai said adequate margin loans provided by banks helped the capital market’s growth last year. “In addition, decline in bank interest rates on deposits helped attract more investment in the stock market,” he said.
The launching of mutual funds also helped the market to grow last year.
With the Securities Board of Nepal (Sebon) — the regulatory body — endorsing the mutual fund guidelines, a number of such institutional investors were established. “These mutual funds have also helped increase the stocks’ demand,” said Bhattarai.
Stock traders have termed the improvement in Nepse as “market correction”.
“The secondary market last year was on the correction path,” said Anjan Raj Poudel, past president of Nepal Stockbrokers’ Association.
He said the introduction of a full budget will have a positive impact in the market. “But the government’s failure to address issues like the capital gain tax has shattered the hopes of a big growth in the Nepse index in the new fiscal year,” he said, adding the Nepse is likely to remain between 500-550 points in 2013-14.
Bhattarai however, expressed hope of a rise in the benchmark index. “The government’s announcement of providing tax subsidy on mutual funds’ dividend could attract more investors in the market,” he said.
src: kathmandu post