KATHMANDU, Nov 21: The Nepal Stock Exchange (Nepse) index plunged 58.46 points, or 3.53 percent, to close at 1,599.62 points on Sunday -- the first trading day of the week.
The market remained volatile throughout the day as panicked investors, with no apparent reasons, scrambled to off-load their shares.
Circuit breaker kicked in after just one and half hours of trading when the benchmark index fell by four percent. Circuit breaker is clamped when there is excess volatility in the market. It is a symbolic way to suggest investors for becoming careful about their investment decision. The market resumed trading half an hour later at 1:07 pm.
Stock market analysts say that the free fall in the market signals a bearish trend ahead after a bull run of nearly three years.
“There has been extreme selling pressure in the market as investors want to get rid of their shares as the market has seen downfall in the past few days,” Anjan Raj Poudyal, former president of Stock Brokers Association of Nepal (SBAN), told Republica.
The market, which was in a downward course as soon as the market opened, however, recovered to some levels around midday. But the recovery didn’t last long as the benchmark index continued to take a dive.
As the bank and financial institutions (BFIs) have tightened their funds toward stock market after liquidity position came to a manageable position, investors are feeling the pinch.
“Bank interest rates are going up. The BFIs are tightening their credits toward stock market as they is no liquidity surplus anymore. The tightening of fund is affecting the market,” Poudyal added.
He also said that the ban on 1,000 and 500 Indian rupee bills has also hit many investors.
“Many investors used to have Indian currency in stock. After the ban on the banknotes, they have to find cash somewhere else. This has depressed demand for shares,” he added.
However, there are some investors who think that there is no any reason for the market free fall. “Listed companies are making impressive performance. The government is opening the market for the non-resident Nepalis. These factors should make the investors upbeat,” Dipendra Agrawal, an investor said. “This is the golden time to buy,” he claimed.
All trading groups were in red on Sunday.
A total of 1.53 million units of shares of 127 companies were traded in the market through 6,776 transactions on the day.