Nepse down 36 points on NRB's downside risk warning

Published On: September 26, 2016 12:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 26: Nepal Stock Exchange (Nepse) index plunged by 2.05 percent, 36.27 points, to close at 1,730.64 points on Sunday.

While stock brokers and analysts say that there is no particular reason for the market to tumble, the recent report of the Nepal Rastra Bank (NRB), the central monetary authority, sparked the stocks rout on the first trading day of the week.

The market had shed 37.57 points on Friday.

Bar some minor corrections, the market has been on a bullish trend over the year.

Excess liquidity in the banking system that lowered interest rates to ultra-low levels, the decision to raise paid-up capital of bank and financial institutions (BFIs) and the lack of investment opportunities for the investors, among other factors, have fuelled bull run in the market despite repeated caution from the regulators.

However, share prices have been falling in recent days with investors seeking to offload their holdings for no obvious reasons, say stock brokers. 

"There do not seem to be any particular reason. But, it seems that the report unveiled by the central bank last week have unnerved the investors to some extent," Gunanidhi Bhusal, the managing director of Aryatara Investment and Securities Pvt Ltd, said.

Unveiling the periodic report on macroeconomic and financial updates of the first month of the current fiscal year 2016/17 on Thursday, the central bank had warned that the anemic growth in remittances is likely to pose downside risk to overall economic activities in general and service industry in particular. 

Also, the approaching quarter-end and festive season have also affected the market, say stock brokers. 

"Many investors want to sell shares on the eve of the festival season so that they can have cash on hand for the celebration. So, this is a correction as investors want to cash in on the rising share prices," Ram Krishna Tiwari, the CEO of Oxford Securities Pvt Ltd, told Republica.

Also, investors want to liquidate their stocks to repay their loan installment as the first quarter-end is near, said Bhusal. 

All trading groups ended in the red zone on Sunday with Insurance group plunging by the highest 247.71 points. Share price of only 10 companies went up on Sunday. A total of 1.15 million units of shares of 137 companies worth Rs 1.06 billion were traded in the market through 5,713 transactions on the day. 

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