Local bourse plunges 6.02pc on virus worries

Kathmandu, March 10

In contrast to the strong rebound of the global stocks, the Nepal Stock Exchange (Nepse) index today plunged 6.02 per cent or 86.39 points to 1,349.31 points, leading to suspension of trading less than two-and-a-half hours after the market opened.

The investor sentiment has taken a beating following the rapid spread of coronavirus and its impeding effects on the economy, say share investors.

Uttam Aryal, chairperson of Investors Association of Nepal, said investors — who had flocked to the sole secondary market of the country to capitalise on the bullish trend — were now rushing to offload their shareholdings fearing the adverse impact of coronavirus and on worries that the value of their stocks would drop further if they did not sell now. “The reappointment of Finance Minister Yubaraj Khatiwada, who is considered not very market-friendly, has further dampened the spirits of share investors,” Aryal added.

The market regulator had clamped the first circuit breaker in less than an hour after transactions opened at 11:00am when the benchmark index fell by four per cent. The second circuit breaker was applied again around 12:30pm after the Nepse index lost five per cent. But the move failed to reverse the market movement, which dropped to six per cent at 1:13 pm, leading to suspension of trading for the day.

With this backdrop, the sensitive index that gauges the performance of class ‘A’ stocks dropped by 5.64 per cent or 17.35 points to 290.36 points and float index that measures the performance of shares actually traded fell by 6.09 per cent or 6.21 points to 96.06 points. Altogether, 2.73 million shares of 161 companies worth Rs 1.08 billion were traded through 9,239 transactions today.

All the sub-indices landed in the red zone. Life insurance subgroup was the biggest loser, dropping by 9.1 per cent or 726.92 points to 7,623.65 points, followed by trading that descended by 7.86 per cent or 67.31 points to 788.66 points.

Hotels went down by 6.86 per cent or 120.86 points to 1,641.73 points and banking sub-index fell by 6.58 per cent or 83.37 points to 1,183.57 points. Non-life insurance subgroup contracted by 5.8 per cent or 362.19 points to 5,878.49 points and development bank sub-index went down by 4.8 per cent or 91.33 points to 1,811.81 points.

The microfinance subgroup lost 4.47 per cent or 102.96 points to 2,202.09 points, manufacturing was down 4.44 per cent or 126.95 points to 2,729.78 points and others descended by 4.05 per cent or 29.39 points to 696.38 points.

The subgroups of hydropower, finance and mutual funds witnessed a drop of less than three per cent.

Neco Insurance and Life Insurance Co Nepal faced negative circuit breakers of 10 per cent each, with their share price closing at Rs 531 and Rs 1,350, respectively.

Issuing a press statement, Tulasiram Dhakal, vice-president of Nepal Investors Forum, urged investors not to panic as the government had been implementing reforms to support the secondary market.