Bloodbath at secondary market suspends trading

  • Benchmark index witnesses highest single day drop

Kathmandu, March 2

There was bloodbath in the secondary market today, with the Nepal Stock Exchange (Nepse) index witnessing the highest single day drop of 6.04 per cent or 96.06 points in a matter of less than two-and-a-half hours to retreat below the psychological threshold of 1,500 points.

“The market has been southbound since yesterday as investor sentiment has been hit by the fact that the finance minister’s term is not ending soon as had been believed earlier,” explained Radha Pokharel, chairperson of Nepal Pujibazar Laganikarta Sangh, adding that the profit-booking by short-term investors also weighed on the market movement.

The current Finance Minister Yubaraj Khatiwada is widely considered as not being market-friendly.

The immense selling pressure witnessed today prompted the market regulator to clamp the negative circuit breakers today and the local bourse was forced to close for the day just two hours and 29 minutes into the trading. Nepse normally remains open for four hours (11:00am to 3:00pm, five days a week (Sunday through Thursday).

Opening at 1,591.36 points today, the benchmark index had plunged to 1,495.30 points by 1:29pm, thereby leading to suspension of trading for the day. As per the new rules, circuit breaker is applied if the market movement exceeds four per cent in the first hour, five per cent within the second hour and the trading is suspended for the day if the growth or fall is above six per cent thereafter. Earlier the limit had been set at three, four and five per cent.

While the Nepse index had dropped below 1,600 points yesterday, it had witnessed record high daily turnover of Rs 4.85 billion, which hinted that share investors remained buoyant. In contrast, the total traded amount today plunged by more than 50 per cent to stand at Rs 2.15 billion.

Altogether, 4.99 million shares of 173 companies were traded through 19,007 transactions today. In comparison, a total of 12.52 million shares of 183 firms had changed hands through 39,289 transactions yesterday.

In line with Nepse, the sensitive index plunged by 5.64 per cent or 19.20 points to 321.43 points, while float index slumped by 6.15 per cent or 6.95 points to 106.10 points.

Stockholders of insurance companies were the biggest losers today. Non-life insurance took a steep dive of 7.46 per cent or 524.73 points to 6,508.07 points and life insurance subgroup shaved off 7.45 per cent or 690.31 points to 8,576.39 points.

Banking — subgroup with the highest weightage in the local bourse — plummeted by 6.74 per cent or 95.4 points to 1,319.51 points.

Microfinance plunged by 5.1 per cent or 135.63 points to 2,521.40 points; development banks sank by 4.51 per cent or 91.30 points to 1,934.06 points; manufacturing and production slumped by 4.09 per cent or 125.82 points to 2,948.23 points; and hotels lost 4.08 per cent or 79.35 points to 1,863.94 points.

Similarly, others fell by 3.93 per cent or 30.79 points to 752.40 points; hydropower was down 3.91 per cent or 42.27 points to 1,037.82 points; trading dropped by 2.69 per cent or 24.76 points to 896.11 points; while finance rested at 700.59 points after falling 2.28 per cent or 16.32 points.

Mutual funds, meanwhile, was able to limit its loss to 1.74 per cent or 0.18 point to close at 10.38 points.

NIC Asia Balanced Fund, Khanikhola Hydropower and Shree Investment Finance were the only three companies to land in the green today and that too barely as they inched up in the range of 1.94 per cent and 0.6 per cent.

On the other hand, Prabhu Insurance led the pack of losers, with its share value down 9.96 per cent to Rs 452. It was followed by Premier Insurance (down 9.94 per cent to Rs 625), Garima Bikas Bank (down 9.89 per cent to Rs 246); RSDC Laghubitta Bittiya Sanstha (down 9.87 per cent to Rs 557) and Grameen Bikas Laghubitta Bittiya Sanstha (down 9.58 per cent to Rs 540).