Nepal | August 06, 2020

Stocks plummet as rally screeches to a halt

Himalayan News Service
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KATHMANDU, JULY 2

The bull run witnessed in the share market came to a screeching halt today due to fears that the Department of Money Laundering Investigation (DoMLI) might start an investigation into the money being invested in the secondary market. Consequently, the Nepal Stock Exchange (Nepse) index today plunged by 6.02 per cent or 80.41 points to land at 1,256.11 points.

In the very first few minutes of opening, Nepse had surged by 26 points but reversed course shortly thereafter, and eventually caused trading to be suspended for the day.

The first circuit breaker was applied at 11:23am for 20 minutes when Nepse dipped by four per cent or 53.50 points to 1,283.03 points. The second circuit breaker was again applied four minutes after the market reopened at 11:47pm when the benchmark index descended by five per cent or 67.04 points to 1,269.48 points. And it took only 13 minutes for the market to suspend trading for the rest of the day after it resumed at 12:27pm when the index plunged by another six per cent at 12:40pm to close at 1,256.11 points.

Earlier, there were talks that the government would allow black money to be invested in the secondary market due to which the market had surged by over six per cent on Tuesday and Wednesday, prompting the market regulator to suspend the trading before the normal hours. However, today some investors spread information that the DoMLI would start investigating such black money that was invested in the secondary market, so the market dropped massively, mentioned an expert seeking anonymity. “Talks that DoMLI would start its investigation spread like wildfire within a few minutes due to which there was uncertainty among investors and the market started plunging,” the source added.

Along with the benchmark index, the sensitive index also went down by 6.27 per cent or 17.99 points to 269.03 points and float index dropped by 6.37 per cent or 6.02 points to 88.46 points.

The total turnover amount today stood at Rs 476.65 million which was achieved through 1,061,890 units of shares of 142 listed companies being traded through 8,409 transactions.

Among all the subgroups, only mutual fund landed in the green zone which saw a nominal increment of 0.1 per cent or 0.01 point to 9.61 points. The trading subgroup did not witness any transaction today.

The hotels subgroup was the biggest loser of the day, plunging by 8.69 per cent or 128.37 points to 1,348.89 points. Likewise, life insurance sub-index dropped by 7.67 per cent or 608.61 points to 7,321.96 points.

Similarly, banking subgroup went down by 7.43 per cent or 87.14 points to 1,085.17 points and manufacturing decreased by 4.73 per cent or 128.52 points to 2,589.85 points.

The others subgroup also descended by 4.44 per cent or 31.39 points to 675.34 points and development banks sub-index dropped by 4.37 per cent or 76.35 points to 1,671.04 points. Likewise, the hydropower subgroup descended by 3.64 per cent or 34.95 points to 924.82 points.

Moreover, non-life insurance went down by 3.15 per cent or 178.31 points to 5,481.04 points and finance sub-index inched down by zero per cent or 0.03 point to 634.83 points.

A version of this article appears in e-paper on July 3, 2020, of The Himalayan Times.

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