KATHMANDU, SEPTEMBER 2
The Nepal Stock Exchange (Nepse) index fell by 2.57 per cent or 52 points during the trading week between August 28 and September 2 to settle at 1,970.62 points.
According to Chhote Lal Rauniyar, former president of Nepal Investors Forum, the dwindling confidence of majority of investors towards the market, persistent liquidity crunch, and the non-revision of loan rates are some of the few reasons for the current dip in the stock market.
"The weak psychology of the masses involved has led to the continuous dip of the stock market over the past few weeks, recording lower numbers of trades and transactions.
Many investors do not want to sell or invest due to this, although bear run is the time with very low risk for investors who have their own capital to spare and don't need to take bank loans to invest in the market," he said.
According to him a large number of investors are easily manipulated or have a tendency to get anxious and start to offload their stocks as soon as the market turns red and start buying when it gets green.
"This has led to a traders-oriented market with a very low number of mediumand long-term investors and created imbalance in the market," Rauniyar explained.
He also shared his belief that the proposals made by the Securities Board of Nepal (SEBON) for the development of the stock market, which was submitted to the Cabinet and has since been on hold, will be approved sooner or later.
"Many works related to the development of the market are still in the pipeline while some have been artificially delayed for personal gains. However, I believe that the necessary development works which are in favour of the market and its stakeholders will move ahead soon. With the increase in brokers and introduction of systematic and necessary policies in place, the transactions in the market could improve significantly, and increase revenue for the government as well."
Rauniyar also pointed out that remittance inflow has increased in the recent months and that it would have a positive impact on the capital market.
"Increase in remittance helps to bring in foreign currency, eases liquidity crunch, decrease interest rates for loans while some of the capital will also enter the market, thereby accelerating its growth. Many of the six million youths who have gone abroad for work have a demat account and are investing through it. Provisions are also underway to have at least 10 per cent quota on initial public offerings for them, which will also affect the market positively in the future," he added.
The sensitive index, which measures performance of class 'A' stocks, fell by 2.18 per cent or 8.54 points to 383.20 points. Similarly, the float index that gauges performances of shares actually traded also witnessed a decrease of 2.69 per cent or 3.45 points to 124.88 points.
Altogether 21.25 million shares were traded during the review week through 162,936 transactions that amounted to Rs 7.55 billion.
The benchmark index opened at 2,022.31 on Sunday and fell by 33.06 points to close at 1,989.26 points. The Nepse index gained 3.76 points on Monday and 2.32 points on Tuesday to close at 1,995.34 points.
On Wednesday, the Nepse index fell by 21.96 points to close at 1,973.38 points and fell again on Thursday by 1.09 points to settle at 1,972.62 points. The market witnessed a gain of 1.67 points on Friday to close the intra-trading week at 1,970.62 points.
Indices of all 13 subgroups landed in red this week. The banking, manufacturing and processing, and mutual funds saw a decrease of 1.66 per cent, 1.7 per cent and 1.39 per cent, respectively. Meanwhile, hotels and tourism fell by 2.21 per cent, others by 0.29 per cent, hydropower by 5.48 per cent, trading by 3.22 per cent, non-life insurance by 2.25 per cent, finance by 3.95 per cent, development banks by 3.57 per cent, microfinance by 3.60 per cent, life insurance by 1.75 per cent, and investment by 4.09 per cent.
A version of this article appears in the print on September 4, 2022 of The Himalayan Times.
