The stock market showed strong enthusiasm on Sunday following the announcement of a flexible monetary policy by Nepal Rastra Bank. The NEPSE index rose by 29 points, closing at 2762.88. On the same day, shares worth more than NPR 1.14 billion were traded, reflecting a rise not only in the index but also in trading volume.
The positive response came after Nepal Rastra Bank released the monetary policy for the upcoming fiscal year last Friday. Notably, the microfinance and commercial bank groups experienced significant gains, with the microfinance sector rising by 3.66% and commercial banks by 3.54%.
Following this, the finance and development bank groups also saw upward momentum. The new policy suggests an expected reduction in interest rates, which is likely to expand business activities and increase profitability for commercial banks.
Moreover, the monetary policy signals the removal of restrictions on dividends for microfinance institutions. As a result, microfinance companies with strong dividend-paying capacity are expected to distribute dividends exceeding 15%.
These policy changes have increased investor interest in banking and microfinance shares. Additionally, the removal of the limit on finance companies to deploy deposits up to 15 times their paid-up capital has attracted investors to this sector as well.
Overall, the monetary policy has created a more positive environment for the stock market. If financial statements for the current fiscal year also reflect positive results, investor confidence is expected to strengthen further.
On this day, over 32.5 million shares from 311 companies were traded. NIC Asia Bank led the trading volume with over NPR 371 million, followed by Butwal Power Company and NRN Infrastructure in second and third places respectively.
