Nepal Stock Exchange (NEPSE) Index gained a record 42 points last week reaching an all-time high of 416.94 when the market closed on Friday. The market is riding on the soaring commercial bank stocks, and is further buoyed by expectations of bonus share issues. According to regulations, all commercial banks with less than Rs 500 million paid up capital have to upgrade it by the end of this fiscal year. The market expects banks to meet this requirement by issuing bonus shares and making new rights offers.
Last week Everest Bank announced both bonus and rights shares after which the price of its stock shot up by 32 percent, from Rs 1,080 to Rs 1,425. Another small bank, the Bank of Kathmandu too has reported profits, and consumers expect bonus issues. The market reflects not only the anticipation of bonus shares but also the liquidity in the market, says Dambar Prasad Dhungel, chairman of Security Board, the regulator. "There are few investment opportunities and even bank interest rates have gone down. Hence the interest in stocks." Not everyone expects the boom to last. "We're waiting to see if this can be sustained or not," says Parameshwor Malla, a broker.