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Gaijatre Index & Its Anatomy: Political Instability

Published by Octron on August 11, 2009

This is a guest article send to us by Mr. Rajesh Sharma (rajeshs_09 [at] hotmail.com). If you too are interested in sharing your article please mail to us at editor@nepseguide.com. We would be glad to share with our readers.

This is the first part (out of three part article) of an analysis regarding recent downfall of NEPSE index despite harvesting season (in the stock market).

Laws of economics & supply and demand are the fundamentals to analyze any market, specially the stock market. In the real-time market, apart from technical factors of the market, there are still more socio-political factors affecting directly and indirectly the market. Even psychological factors play great role in this market. Panic Attack, fear of losing everything, greed to achieve everything, etc. Human qualities can swirl the market to hit rock bottom or bounce back the market to hit the circuit breaker.

Since, the day Maoist came into regime (pun intended!) after elections in 2008, the stock market started crashing like never before. From above 1,100 points NEPSE index started declining until former prime minister Pushpa Kamal Dahal resigned from the post like hapless shepherd failed to control his flock. Be it irrelevant announcement of NTC share floating in the secondary market in the Budget speech, increasing CGT to 15% or Sending warning letters to 300 big stock market traders from IRD (Internal Revenue Department), those actions just dragged the index down day by day. Though the dreadful era for investors ended with the Maoist government downfall, but still the market couldn’t revive. Instead its dwindling, sea saw picture of NEPSE index in past few weeks clearly reflected public’s confused mind. While the constant fall of index despite heavy cash inflow from IPO refunds just depicts investors lack of confidence upon the political leaders, law and security and the market itself.

Lets ponder on the reasons, why the market couldn’t revive despite excellent 3rd quarterly financial reports from the Banks, Hydropower, Telecommunication. Reduction in capital gain tax from 15% back to 10% also couldn’t help much to boost the market.

Political Instability:

The tug-of-war among different political parties are giving headache to investors, specially the big players which can’t be relived by Anacin or Coldarin. The indigestible conflicting issues regarding;

Madhav Kumar Nepal: New Prime Minister (who lost from both constituency in the election) and his inadequacy to address any of the major issues with strong commitment. He seems to be still confused between Divine Plant or Poison Plant.
Fool get over it!
You are human, so act rationally!
Unsolved Case of Rugmand Kutawal: Maoist constant winning about President’s action against then Prime Minister Pushpa Kamal Dahal, halting assembly, calling for bandhs, chakkajams. Mr. Prachanda, you don’t have to act as barbaric, just because you stayed 10 years in Jungle.
Industrial Shutdown: Constant nagging by YCL & other groups along with labor unions affiliated to those groups putting unreasonable demands, calling for strikes, forcing to close down all factories in industrial areas frequently.
Good Work Dudes, Why do we need industries ?
We have China & India for production from salt to cars.
Now, all we need is money printing machine !
Announcement of fresh protests claiming as third revolutionary movement by Maoist. Wasn’t August Revolution sponsored by Maoist?
We have already seen its result; The New Nepal !
Now, what after this movement ?
Old wine in a New Bottle?
Petty clash of language over Vice President speech.
In Rome, do as Romans.
In Nepal, speak Nepali.
It’s that simple.

There is still a long list of political issues, but the government instead of addressing those issues is busy enjoying the chair.

Tomorrow, 12th Aug 2009: Gaijatre Index & Its Anatomy: Social Doldrums Psychology
Day After Tomorrow, 13th Aug 2009: Gaijatre Index & Its Anatomy: Supply & Demand

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