KATHMANDU: In the week spanning July 28 to August 1, 2024, the Nepal Stock Exchange (NEPSE) experienced significant volatility, with a notable surge at the week’s start followed by fluctuating movements.
The index initially climbed to 2,681.56 but faced dips and rebounds, ending at 2,755.62, reflecting investor uncertainty and market fluctuations.
Concurrently, gold prices in Nepal saw a 2.6% increase, reaching NPR 149,900 by August 2, driven by global economic factors and market demand.
Additionally, Nepal reported a historic net surplus in electricity exports for fiscal year 2023/24, alongside new regulations from the Nepal Rastra Bank aimed at reducing microfinance service fees and interest rates.
The week also saw the finalization of a $38.89 million contract for a major new 400 kV substation in Damauli, marking a significant infrastructure development.
NEPSE experiences volatile week with initial surge and subsequent fluctuations
In the week of July 28 to August 1, 2024, the Nepal Stock Exchange (NEPSE) exhibited a dynamic pattern of fluctuations.
The week began with a robust performance on July 28, as the index surged to 2,681.56, reflecting a substantial increase of 113.42 points or 4.41%.
However, this bullish momentum was curtailed on July 29, with the index dipping to 2,661.09, a decrease of 20.46 points or 0.76%.
The market rebounded on July 30, climbing to 2,696.65, a rise of 35.55 points or 1.33%. This upward trend continued into July 31, with the index peaking at 2,760.91, an increase of 64.26 points or 2.38%.
Yet, the positive trajectory faced a minor setback on August 1, with a slight decline to 2,755.62, down by 5.29 points or 0.19%.
Overall, the NEPSE index demonstrated significant volatility throughout the week, reflecting both investor confidence and market uncertainty.
The sharp rise at the beginning of the week and subsequent fluctuations suggest a mixed sentiment among investors, possibly influenced by broader economic indicators or sector-specific developments.
Gold prices surge by 2.6% in Nepal over the week
During the week of July 29 to August 2, 2024, the price of gold in Nepal exhibited notable volatility. On July 29, gold was priced at NPR 146,100 per tola, marking a slight decrease to NPR 146,000 the following day.
However, the price trend reversed dramatically with a sharp increase to NPR 147,800 on July 31. This upward momentum continued into August, with gold prices climbing further to NPR 149,400 on August 1 and reaching NPR 149,900 by August 2.
The overall weekly trend indicates a significant rise of NPR 3,800 from the beginning to the end of the week, reflecting an escalation of approximately 2.6%.
This increase could be attributed to a combination of factors including global economic uncertainties, fluctuations in currency value, or shifts in market demand and investor sentiment.
The volatility suggests that while there was a short-term correction early in the week, the overarching trend was towards higher gold prices, which might have been driven by heightened demand or geopolitical factors influencing market dynamics.
Nepal achieves net electricity export surplus for the first time in fiscal year 2023/24
For the first time, Nepal has achieved a net surplus in electricity exports, with revenues surpassing the costs of importing power from India for the fiscal year 2023/24.
The Nepal Electricity Authority (NEA) reported that the country exported electricity valued at NPR 16.93 billion, while expenditures on imports amounted to NPR 16.81 billion, resulting in a net gain of over NPR 120 million.
This milestone follows the cessation of daily power outages in 2018 and reflects the significant increase in private sector involvement in electricity generation.
Nepal exported 1.9426 billion units of electricity to India at an average rate of NPR 8.72 per unit, compared to imports of 1.8335 billion units at NPR 9.17 per unit.
Additionally, the NEA has secured a decade-long agreement to supply 10,000 MW to India, despite potential challenges posed by winter shortfalls.
NRB tightens regulations on MFIs: lowers fees, caps interest rates, and refines default criteria
Nepal Rastra Bank (NRB) has introduced new regulations for microfinance institutions (MFIs) to address concerns over high service fees and surcharges.
Effective from Sunday, the maximum service fee has been reduced from 1.5% to 1.3%, and additional surcharges are now prohibited.
This regulatory change aims to mitigate the issues of high service charges and interest rates that have led to substantial debt for many borrowers.
The updated monetary policy for 2024/25 also includes a cap on MFI interest rates, which have previously reached up to 15% annually.
New provisions allow households to obtain collateral-free loans up to NPR 25,000 with family guarantees, while group-based loans for micro-enterprises have been increased to NPR 700,000. Additionally, borrowers can now access loans from up to two MFIs.
The NRB has also revised the criteria for classifying loan defaults, differentiating between willful defaulters—those who avoid contact, obstruct auctions, misuse funds, or provide fraudulent documentation—and non-willful defaulters, before any blacklisting measures are applied.
MCA-Nepal finalizes $38.89 million contract for new 400 kV substation in Damauli
The Millennium Challenge Account – Nepal (MCA-Nepal) has finalized a $38.89 million contract with Techno Electric and Engineering Company Ltd. (TEECL) of India to build a 400 kV substation in Damauli, Tanahun district.
This contract marks the completion of all three major 400 kV substation projects under the MCA-Nepal Compact.
The New Damauli Substation, with a planned capacity of 1000 Mega Volt Ampere, will rank among the largest substations in Nepal, alongside the Ratmate Substation, for which MCA-Nepal secured a similar contract in June 2024.
The New Damauli Substation is expected to be a crucial hub for integrating power flows between the Ratmate, Lekhnath, and New Butwal Substations.
(Prepared by Srija Khanal)
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