The Nepal Stock Exchange (NEPSE) on Tuesday gained 34.17 points to close at 2,020.64 points, a three-month high for the NEPSE index.

The market recorded Rs4.126 billion in transactions. 10.801 million units of stocks were traded on Tuesday. The transaction volume on Monday was worth Rs2.88 billion.

According to NEPSE, 196 companies saw an increment in their share prices, whereas the stocks of 22 companies declined, while the stock price of five companies remained unchanged.

The meeting of the Nepal Bankers’ Association held on Tuesday afternoon declared that the interest rate on the deposits will remain constant, whereas, the interest rate on the loans will decline from mid-June.

Murahari Parajuli, the spokesperson of the NEPSE, said that the bank’s decision to lower the interest rate could be one of the factors that boosted the market. “However, we cannot solely attribute one reason behind the growth.”

The investors say that the ease in liquidity, supportive policy from the government and the gradual improvement in the overall economy is the reason behind the market’s growth.

Tulasiram Dhakal, chairman of the Nepal Investor Forum, said that the market started declining two years ago due to the effects of the Covid-19 crisis, inflation and depleting foreign exchange reserves. It was also affected by the subsequent restrictive policy adopted by the central bank to limit the borrowings for investing in the stock market.

“Now, the government has taken corrective actions such as distribution of licences for new brokers, provision of margin lending, and their decision to allow non-resident Nepalis to invest in the market and repatriate the profits from the stock market,” said Dhakal, adding the banks have started decreasing the interest rate on loans and the liquidity in the country is easing too.

“Due to all these factors, the stock market is set to go up further, even though there may be a few corrections along the way,” Dhakal added.