Don’t be fooled

The NEPSE index recently hit an all-time high; the current political and economic turmoil has hardly made a dent.

The Nepal Stock Exchange is flying high even though the economy is still trying to regain its footing after being clobbered by Covid-19 and a prolonged lockdown. On December 2, jaws dropped when the NEPSE index shot up to 2063.04 points, an all-time high since trading began in 1994. After a brief moment, when the market was thought to be crashing this past Sunday, NEPSE again closed at 2061.41 points on December 22; then, against all odds, it hit 2126.90 points before closing at 2,068.45 on December 23. That the dissolution of Parliament by the prime minister, when his own party holds a near two-thirds majority in the House, only brought a short-term drop (albeit a 90-point single-day drop before the circuit breakers were employed) is startling. NEPSE's stratospheric rise has got experts perplexed. It is important to analyse why stocks jumped, because the capital market doesn’t have strong foundations to handle such an upsurge, especially during an economic and political crisis.