Interest rates & Nepse; NEPSE in the trend line of Booming.

Investors pay attention to the interest rates as they can impact the stock market. It is the cost that banks charged for borrowing money. If central bank raises interest rates, it would increase the cost of borrowing for companies. An increase in cost of borrowing would have a negative impact on company profitability. Stocks are valued based on a multiple of their earnings; higher interest rates with other factors remaining the same would lower the overall company value. Declines in the value of a number of companies as the result of higher interest rates would lower the overall stock market value.

Currently in Nepal, banks are charging 17 plus percent interest for loans and the private sector has been asking them to reduce it. As market is not struggling with low deposits, interest rates have started to go down. There is about Rs 65 billion worth of excess liquidity in the financial sector right now, according to NRB, the Central Bank of Nepal. So the banking sector expected to reduce lending rates soon. The banks are expected to attract more borrowers by lowering the lending rates, as lowered lending rate in supposed to encourage the entrepreneurs and boost the market activities as well. Also easing of lending rate is feared to lower the deposit interest rate. But as deposit rate starts to lower the investor's interest of buying shares will rise, as the charm of other alternative of investment like buying of land, real estate investment, and investment in Gold & Silver are decreasing day by day.

What we can forecast here for NEPSE depending upon all the favorable conditions that our Market is in the trend line of Booming in the near future. We already discussed about all the favorable conditions like, trend of lower deposit rate (in the line of mega-trend), lower interest of investors in other Investment Alternatives etc. And also the Eco-political situation, which is showing the positive sign that also gives fuel to run faster towards the upward trend of NEPSE in the near future. So All the Investors in frustration for last 3-4 years must Run Run Run to optimize their Portfolio. 

 Buy Shares, Buy Blue-chip Shares now.............Happy Investment...............Cheerrrrrssssss!!