Kathmandu, February 18
The Nepal Stock Exchange (Nepse) index slumped by 112.22 points or 5.14 per cent in the trading week between February 12 and 16. The market was open for just four days during the review week and was southbound throughout.
According to market analysts, the existing liquidity crunch in the country's financial system, lack of fundamental investors in the market and low confidence among existing investors after the central bank failed to fulfil their demands in the half-year Monetary Policy review caused the slump.
The share investors have been requesting the Nepal Rastra Bank (NRB) to remove the cap of Rs 120 million on margin loans, address the liquidity demand, replace credit to core-capital plus deposit (CCD) ratio with credit-deposit (CD) ratio, and reduce risk weighted average to 100 per cent and interest rates.
Although the market had witnessed a steady growth and resurfaced above the 2,200-point threshold following the formation of a new government, among other factors, the benchmark index is expected to remain volatile unless further progress is seen in the country's financial situation, analysts say.
The sensitive index, which measures performance of class 'A' stocks, decreased by 4.57 per cent or 18.98 points to 396.44 points in the review period. The float index that gauges performances of shares actually traded also fell by 5.37 per cent to 145.29 points.
Altogether 22.38 million shares were traded during the review week through 156,668 transactions that amounted to Rs 8.25 billion.
The weekly turnover dived by 34 per cent compared to the previous trading week, when 34.61 million shares had changed hands through 220,012 transactions that totalled Rs 12.52 billion.
The average turnover in the review week stood at Rs 2.06 billion, down 17 per cent compared to the average turnover of Rs 2.50 billion in the previous week. It may be noted that the market was open for just four days in the review week compared to the normal five trading days in the previous week.
The benchmark index had opened at 2,182.63 points on Sunday and fell by 60.77 points to 2,121.86 points by the time of closing and continued to drop throughout the trading week. The market remained closed on Monday as the country observed 'People's War Day' and went on to drop further by 16.40 points on Tuesday to 2,105.46 points. On Wednesday, the benchmark fell again by 13.90 points to 2,091.56 points before decreasing again by 21.15 points to 2,070.41 on Thursday.
Finance led the pack of losers after falling by 7.45 per cent to 1,708.44 points. Similarly, hydropower fell by 7.19 per cent to 2,541.66 points; investment dropped 6.65 per cent to 64.85 points; life insurance lost 6.38 per cent to 10,313.44 points; development banks decreased by 6.28 per cent to 3,648.55 points; hotel and tourism fell by 5.96 per cent to 3,123.10 points; and non-life insurance by 5.13 per cent to 8,959.65 points.
Banking, the subgroup with the highest weightage in the market capitalisation, landed at 1,352.01 points, down 3.84 per cent or 53.95 points.
Meanwhile, the microfinance subgroup fell by 5.01 per cent to 4,484.35 points; manufacturing and processing by 4.76 per cent to 5,142.50 points; trading by 4.12 per cent to 2,222.28 points; others by 4.04 per cent to 1,487.79 points, and mutual funds by 2.26 per cent to 14.29 points.
A version of this article appears in the print on February 19, 2023, of The Himalayan Times.
