August 6, 2016 12:30 AM NPT
Logs weekly loss of 94 points
KATHMANDU, Aug 6: Nepal Stock Exchange (Nepse) index shed 94.16 points this week to close at 1,768.6 points on Thursday, the last trading day of the week.
Following a long rally over the past couple of years, the stock market ended on the red zone in all the trading days this week. Many analysts interpret the rapid fall in the stock market to the election of CPN (Maoist Center) leader Pushpa Kamal Dahal as the new prime minister of the country. The market was on a freefall since the beginning of the week when it was confirmed that Dahal would succeed KP Oli as the country's prime minister. There are many others who believe that the stock market is now retreating after hitting a new peak.
“The stock market has been rising continuously hitting new peaks on the way. It cannot go up always. It has to retreat after reaching a certain level. Investors are now booking profit from the rise in share prices during the bull run,” Badri Prasad Phuyal, who owns Kumari Securities Service Pvt Ltd -- a brokerage firm, told Republica.
"The election of a communist leader as the prime minister is one of the reasons behind the plunge. Repeated cautions from regulatory bodies like Securities Board of Nepal and Nepse also have also contributed to market correction," he added.
Many investors also worry that the fall of the benchmark index from the peak might trigger sell off among small investors. "Since the market is now taking a downward course, I am now selling shares so that I do not have to regret later when there is a panic sell off.” an investor told Republica, requesting anonymity.
All the trading groups logged loss this week. Insurance group suffered the highest loss of 543.76 points to close the week's trading at 8,559.02 points. The sub-indices of Hydropower and Development Bank groups also shed 130.66 points and 119.64 points, respectively, to settle at 2,594.46 points and 1,833.52 points. Hotels group ended 110.38 points lower at 2,142.29 points. The sub-index of Manufacturing and Processing fell by 101.22 points to close at 2,556.02 points. Banking and 'Others' group also went down 88.15 points and 23.42 points, respectively, to end the week at 1,667.25 points and 810.95 points. Finance group also ended on the red zone as its sub-index plunged 33.59 points to close at 865.28 points. Trading group remained unchanged at 202.79 points.
A total of 17.2 million units of shares of 152 companies worth Rs 7.79 billion were traded in the market this week through 36,390 transactions. The turnover is 18.28 percent lower compared to last week.