Nepal Stock Exchange (Nepse) recorded stock transactions of Rs 280.67 million from Monday through Thursday, as against 382.14 million in the same period previous week.[break]
“The trading volume fell as many investors took wait-and-see approach due to continuous fall in the Nepse index,” Stockbroker Anjan Poudel told Republica.
Nepse index fell 15.52 points, or 3.05 percent, over the week as a new regulation that triggered fears of oversupply of shares in stock market dampened investment sentiment, according to Poudel.
Poudel was referring to a new provision introduced by the Securities Board of Nepal (Sebon) that paved the way for use of stockbrokers to sell promoter shares of banks and financial institutions (BFIs). Many believe this facility -- that allows floatation of up to 49 percent of shares of BFIs on the stock market for the public as against 30 percent in the past -- would sharply increase supply of shares on the stock market, causing share prices to take a plunge.
However, Sebon has defended the move saying that such a situation would not arise as the stock market does not have appetite for consumption of huge amounts of shares even if they are floated on the bourse.
“In addition to this, the reduction in extension of margin loans and fears of hike in lending rates due to liquidity strains felt by banks and financial institutions also reduced investment appetite, causing the benchmark index to take a dip,” Poudel said.
And as the index fell, buyers started waiting for further reduction in share prices, while those who had made up mind to sell stocks either have not found clients or are waiting for upward adjustment in prices, Poudel further said.
“This sentiment caused stock trading volume to take a plunge this week, making the market less liquid,” Poudel added.
Over the week, major sub-indices that make significant contribution to the market capitalization ended lower.
Banking sub-index, for instance, fell to 489.48 points on Thursday from Sunday´s opening of 503.77 points. Hydro sub-index also retreated to 1003.40 points on Thursday from weekly opening of 1027.56 points.
Similarly, insurance index plunged to 807.78 points on Thursday from 847.16 points recorded on Sunday, while the sub-indices of development bank and finance company ended the week at 246.15 points and 246.09 points, respectively on Thursday, down 2.46 points and 4.48 points from Sunday´s opening.
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