Nepse plunges 20 points on CA dissolution
KATHMANDU, MAY 30 -
It was no surprise that the capital market reacted negatively to the news of the Constituent Assembly (CA) being disbanded. The Nepal Stock Exchange (Nepse) plunged on Tuesday losing 20.98 points.
The market closed 45 minutes before its normal closing time after Nepse suspended transactions for the day due to a steep fall in the index of more than 5 percent. Nepse fell 5.08 percent to settle at 391.89 points.
Stock experts said that Nepse took a dive as per their expectations as it has been fluctuating with the political developments. “I got calls and text messages from my clients even before trading began on Tuesday,” said Poudyal. “Almost all the calls were from panicked investors who wanted to get rid of their shares.” As soon as trading began on the stock exchange, his clients rushed to his brokerage firm at Naxal, asking him to find buyers for their stocks.
However, there were few takers. “The placement of buying orders was very rare,” said Poudyal. “This resulted in the index taking a plunge.” The market saw many sellers and almost no buyers on Tuesday. “The mood of investors that was buoyant following the deal on integration of Maoist combatants turned,” said Poudyal.
Even the shares of companies considered as good performers on Nepse were unable to find buyers. The common stock of Bank of Kathmandu which is considered to be the most liquid stock on the exchange was struggling to find investors.
Unavailability of investors also led to a sharp decrease in the total turnover at the exchange. Earlier, Nepse was witnessing a daily turnover worth Rs 70-80 million on an average, but it fell to a mere Rs 8.44 million on Tuesday. Even a single company could not witness the trading of a million. Stock brokers say this will increase selling pressure.
All the sub-indices on the exchange registered losses except hotels which registered a growth of 29.76 points and trading which remained intact. The banking sub-index fell 19.83 points. Hydropower companies, others, insurance companies, manufacturing industries, development banks and finance companies lost 43.98, 58.73, 9.79, 6.65, 3.52 and 0.8 points, respectively.
According to Poudyal, a majority of the investment in the recent past was done with a speculative motive. “About 80 percent of the investment in the recent past was of short-term nature as investors were expecting a steep rise in the index with the promulgation of the constitution,” said Poudyal. “But it did not materialize, and now they want to make sales at the earliest.” So in the coming days, we are expecting the market to fall.
Source: The Kathmandu Post
