The Nepal Stock Exchange (Nepse) index hit a high of 1,212 points on Sunday on the implementation of the demat system and positive development towards the settlement of the Madhes issue.

The last time the index had hit such highs was on August 21, 2015 when the Nepse reached 1,221.30 points and dropped to 1,200.92 later in the day.

The Nepse set the official record of 1,205.84 points on September 15. However, the Tarai unrest and Indian unofficial trade embargo dampened the mood at the secondary market. As a result, the index plunged to a five-month low of 1,022.77 points on November 29.

Stockbrokers said that the possibility of reaching a political consensus to address the Madhes issue and the enforcement of paperless share transactions by the Securities Board of Nepal (Sebon) had contributed to the surge in the Nepse index, which jumped 21.84 points on Sunday.

“Apart from other factors, the growing use of technology in the stock market has mainly helped boost investor confidence,” said Priya Raj Regmi, president of the Stockbrokers’ Association of Nepal. He expressed hope that the secondary market would grow further in the future.

Anjan Raj Poudyal, managing director of Thrive Brokerage House, said the excess liquidity with banks, positive political development and enforcement of demat shares affected the market. “As investors have also matured, the fall in bank interest rates resulted in more investments, boosting the demand,” he said.

Totally electronic share trading began on Sunday after Sebon made digital share certificates mandatory. According to CDS and Clearing, a subsidiary of Nepse, only 170 companies out of the 239 listed on Nepse have dematerialised their shares. The shares of 69 listed companies are yet to be converted into electronic format while 22 companies are in the process of merging.

The indices of almost all the trading groups except hydropower rose on Sunday.

There was a three-digit growth of 127.98 points in the insurance group, the highest increase. It was followed by commercial banks, development banks, hotels, others and finance companies.

The index of commercial banks that hold a major stake in the secondary market climbed 24.56 points. As a result, the sensitive index that represents A class companies also grew 4.53 points.

With an increase in the Nepse, the transaction volume also jumped to Rs548.11 million. The turnover usually reaches Rs300 million.

According to Nepse, 825,954 shares changed hands while market capitalisation reached Rs1,306.21 billion.

Nepal Bank Limited saw the largest number of shares traded, 56.35 million, while First Microfinance Development Bank witnessed the biggest gain of

9.94 points.