The benchmark index, which opened at 502.38 points on Tuesday, fell 1.62 points, or 0.32 percent, to 500.76 points by the end of the day. The last time the index had slumped to that level was on December 13, 2012.[break]
“The main reason for today"s (Tuesday"s) fall was public call made by Nepal Bank Limited to investors to purchase shares of the state-run financial institution by May 8 to be eligible for bank"s rights shares,” Stockbroker Nanda Kishore Mundada told Republica.
Nepal Bank Limited is extending rights shares in the ratio of 1:9.5 to its shareholders, meaning every investors holding every share of the bank will get additional 9.5 shares at Rs 100 each.
“Since the bank has also allowed representatives of shareholders to purchase rights, many investors have started raising funds to buy these stocks,” Mundada said.
Share prices of Nepal Bank Limited soared to Rs 626 since they were relisted on the stock market at Rs 100 each on December 2. However, shares of the bank fell almost 10 percent on Tuesday as shareholders who do not have capacity to purchase huge amounts of rights dumped the stocks, according to Mundada.
Another reason for Nepse fall, according to Mundada, is rumor that the Securities Board of Nepal"s (Sebon"s) latest decision to allow stockbrokers to sell promoter shares of banks and financial institutions would sharply increase supply of shares on the stock market, causing stock prices to take a dip.
However, Sebon has said such a situation would not arise as the stock market does not have appetite for consumption of huge amounts of shares even if they are floated on the bourse.
Sebon Chairman Babu Ram Shrestha told Republica last week: “The daily trading volume at the stock market hovers at Rs 70 million to Rs 80 million and shares of about 40 to 50 companies are traded every day. This means average trading volume of every listed company hovers at around one million rupees. So even if promoters decide to float huge amount of shares, these sellers wouldn"t find buyers and would be forced to sell shares using offer documents as in the past.”
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