NEPSE records dead cat bounce back

KATHMANDU, July 27: Nepal Stock Exchange (Nepse) bounced back, gaining 3.18 percent or 22.53 points, on Monday after investors realized they had wrongly understood the capital fund provision of monetary policy that allowed banks and financial institutions to utilize retained earnings and reserves to increase their capital base.

"The investors today understood that the provision was only optional and the executive board of the banks could still prefer to issue bonus and rights shares," said a market analyst, adding that end of the confusion mainly caused the market to bounce and close at 730.64 points.

The secondary market had slipped to seven-month low on Sunday, dropping 29.73 points, after investors responded negatively to the monetary policy.

Sensitive index, which reflects the performance of category ´A´ companies, gained 4.1 percent or 7.74 points and closed at 196.37 points. Likewise, float index, which represents the price of ordinary shares in the market, bounced by 3.36 percent or 2.48 points on the day, closing at 70.79 points.

Stock analysts said that the dead cat bounce by Nepse has to do with the investors´ optimism that Governor Bijayanath Bhattarai would also revise the provision of capital fund of the new policy.
REPUBLICA