The share market has again plummeted worryingly by over 46 points on the first day of trading for the week calling for immediate steps to improve the market. The Nepal Stock Exchange (Nepse) index has fallen unnaturally as the small investors have panicked when the market corrected after a continuous rise.
It had fallen by over 50 points during the last week. Nepse had to employ circuit breaker twice after the unnatural fall on Sunday. Market analysts state that the investors are worried due to rumors about further fall in the market. The stakeholders concerned, however, have been urging to not go by the rumor mill. “The state of share market will only be known after trading on Tuesday. It will clarify whether debt has been mobilized in the market or saving,” Nepse Spokesperson Shambhu Panta says. He explains that the market will improve if saving has been mobilized and fall if debt has been mobilized. Pants reveals that the market has fallen even though the return provided by companies to the share investors is better than that provided by the financial market. “Rumors have swayed the market which has not been directed rationally due to lack of institutional investors in the market. It is not good for the market to act according to rumors. The policy makers must think about the market when it falls in such a manner due to rumors,” he states.
Investors and market analysts reason that the market has fallen as the message that the Nepal Ratsra Bank (NRB) is not market friendly has been disseminated. “The small investors are scared due to unstable policies of the central bank. This is the time to raise investment. Investment on shares is providing good return,” investor Ambika Prasad Poudyal states adding that there is no rational reason for the Sunday’s fall. Managing Director (MD) of Thrive Broker House Anjan Raj Poudyal says new investors are still entering the market. “The market has plummeted as the new investors are not exercising patience. The new investors panic when the market falls fearing further fall and sell shares. This is what has happened now,” he explains. He claims the buyers are bargaining to buy shares now. Share analyst Rabindra Bhattarai opines that instability in the political environment on Sunday deflated the investors.
The Nepse index that had reached 1083 points on July 21 has dropped by 208 points to 875.56 by Sunday as the market is on a bearish trend. The total market capitalization, however, has not fallen despite the massive fall in the Nepse index. The total market capitalization of Nepse is Rs 894 billion on Sunday which is average. It had remained in between Rs 800 billion to Rs 1 trillion in recent times.
The share market had started to fall massively after the NRB brought a provision limiting banks and financial institutions to mobilizing loan in margin lending to just one percent of their paid-up capital. Nepse is continuously falling as the morale of investors weakened by the provision has been further deflated due to signs of political instability. The Nepse index that improved a bit at the start of trading on Sunday could not continue to rise.
Nepse, that was at 921.69 at the start of trading on Sunday, fell by 46.13 points to close at 875.65. The sensitive index of A Grade companies also fell by 10.38 points. The collective banking index fell by 52.59 points, insurance by 161.22, hotels by 8.11, development banks by 16.59, finance by 11.85, hydropower by 170.15, manufacturing by 0.68 and others by 27.01.
Transaction amount, however, increased a bit despite the fall of Nepse index on Sunday. A total of 1,829,349 shares of 127 companies were traded for Rs 501.79 million through 2,982 transactions on Sunday. A total of 863,702 shares of 133 companies were traded for Rs 399.23 million through 3,115 transactions on Thursday.