The renewed investor confidence also brought trading to halt thrice in the day as the market rallied beyond the levels set by the stock market operator. [break]
The domestic stock market had started sliding since last Tuesday after political parties showed signs of dithering on its promise of promulgating the constitution and concluding the years-long peace process by May 27. Lowered third quarter profits posted by banks and finance institutions, which make up over 70 percent of listed companies, also exerted pressure on share prices, causing the Nepse to move downhill.
But the Monday night agreement on system of governance reached between political parties and commitment to reach a deal on federalism - news of which were splashed across front pages of Tuesday´s national dailies - propped up investor confidence triggering a rally on the stock market.
Nepse´s daily report showed the biggest gainers on Tuesday were reputed commercial banks, including Standard Chartered, Nepal SBI, Everest, Nepal Industrial and Commercial, and Nabil.
Stocks of Standard Chartered Bank and Nepal SBI Bank gained 10 percent each to end at Rs 1,914 and Rs 627, respectively. Share prices of Everest Bank and Nepal Industrial and Commercial Bank also rose by 9.94 percent each to close at Rs 995 and Rs 564, respectively, while stocks of Nabil Bank ended the day at Rs 1,340, up 9.93 percent.
Share prices of most of the listed companies started rising soon after the market opened for the day at 12 noon. Within next 34 minutes, the benchmark index had gained three percent, which tripped the circuit breaker and trading was halted for 15 minutes.
After 11 minutes of resumption of trading, Nepse was compelled to roll out another circuit breaker as the index went up by four percent. This resulted in suspension of trading for half an hour. Then at 1:48 pm trading was halted for the day as the benchmark index gained five percent.
It is regular practice at Nepse to introduce circuit breakers and halt trading once the market rises or falls by three percent, four percent and five percent. This is done to protect the market from negative effects of sudden rise or fall in share prices.
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