📈Stock Market Soars: NEPSE Hits Positive Circuit After NRB Lifts Rs. 25 Crore Loan Cap
KATHMANDU – The Nepal Stock Exchange (NEPSE) index has staged a dramatic recovery, hitting a positive circuit breaker on Thursday. This bullish surge comes immediately after the Nepal Rastra Bank (NRB), the central bank, issued a circular on Wednesday, removing the controversial Rs. 25 Crore loan limit on margin lending against shares.
The NEPSE index, which had seen a triple-digit decline just a day earlier on the last trading day before the Dashain festival, opened with significant upward momentum. Trading was halted just minutes after the market opened, as the index surged by over 4%.
-
Initial Jump: The NEPSE index rose by 102 points immediately upon opening.
-
Circuit Break Triggered: The sharp jump triggered a 20-minute trading halt, a mechanism designed to stabilize the market during extreme volatility.
-
Index Level: Following the halt, the NEPSE index had reached the 2,662-point mark.
-
Early Turnover: Trading volume in the brief period was robust, with over Rs. 27 Crore worth of shares already transacted.
Key Central Bank Decisions Fueling the Rally
The market’s enthusiasm is directly linked to the decisions made by the Nepal Rastra Bank. The key policy changes are:
-
Removal of the Rs. 25 Crore Loan Ceiling: The central bank has completely removed the maximum limit for individual margin loans secured by share collateral. This was the most-anticipated move by investors, who had long argued that the limit restricted the flow of capital and stifled market growth, particularly for large-scale investors. The removal of this cap is expected to inject significant liquidity into the market.
-
Increased Flexibility in Trading Hours: In addition to the loan limit, the NRB has also introduced greater flexibility regarding the time period banks can engage in share transactions. While the details are yet to be fully assimilated, this move generally signals a more accommodative and market-friendly regulatory stance from the central bank.
What Does This Mean for Investors? (Analysis & Context)
The removal of the loan cap is a landmark decision with far-reaching implications for Nepal’s capital market:
-
Boost to Investor Sentiment: The move is a significant win for investors and is being seen as a clear signal that the central bank is now taking a more supportive, rather than restrictive, approach to the stock market. This renewed confidence is the primary driver of today’s positive circuit.
-
Increased Liquidity: By removing the cap, the NRB allows individuals to secure much larger loans against their share portfolios. This influx of borrowed capital is expected to increase buying pressure across the market, sustaining the bullish trend.
-
Targeting Large Investors: The previous cap disproportionately affected high-net-worth individuals and institutional investors. The removal of this barrier allows them to re-enter or expand their positions, which is crucial for driving large-volume transactions and overall market capitalization growth.
Market analysts anticipate that if this positive sentiment continues, the NEPSE index could soon test new resistance levels, signaling an official end to the bear market cycle that had been in place for several months.
