KATHMANDU, Nov 25: The Nepal Stock Exchange (Nepse) benchmark index fell 65.59 points this week to close at 1,534.03 points on Thursday -- the last trading day of the week. The stock market has been in a freefall for the last five weeks.
The stock market has been dipping since the first week of October.
Stock prices took a dive in all five days of trading this week as investors scrambled to offload shares fearing a further drop in prices further fueling the bear market.
Nepse imposed a circuit breaker on the first trading day after the benchmark index fell by 4 percent.
Many analysts say a tightening in the flow of funds from bank and financial institutions (BFIs) to stock market investors owing to liquidity a crunch in the banking system was one of the main factors that drove down the market.
With BFIs having increased their interest rates, investors are taking money out of the stock market and depositing them at BFIs seeing better returns there, brokers say.
A ban on Indian banknotes of Rs 1,000 and Rs 500 denominations was also a factor in the plunge, observers say. “Stock market investors were enjoying cheaper financing from the bank and financial institutions when the interest rates were so low. But now liquidity is getting tighter,” Anjan Raj Poudyal, a former president of Stock Brokers Association of Nepal (SBAN), says. “Also the demonetization of high-value Indian banknotes weighed on the market. Many investors also held stacks of Indian cash and were left without cash. They are instead looking for cash and this is creating a selling pressure in the market,” he adds.
A total of 7.33 million units of shares of 152 companies worth Rs 5.7 billion were traded in the market this week through 31,336 transactions.
The value of the Insurance group fell the most this week and its sub-index nosedived 747.47 points to close at 7,493.05 points. The index of the Hotels group tumbled 105.07 points to close at 2,025.51 points. The sub-indices of the Development Banks and the Hydro Power groups also fell 99 points and 70.09 points, respectively, ending at 1,582.44 points and 1,953.8 points.
Banking, the heavyweight group, shed 49.64 points to finish at 1,442.09 points. The value Finance, and the Manufacturing and Processing groups also went down by 14.2 points and 13.64 points, respectively, closing at 752.53 points and 2,228.23 points.
The shares of the Others and the Trading groups bucked the trend as their indices went up 10.41 points and 1.12 points respectively to close at 753.4 points and 203.91 points.