Nepse plunges below 1,000 pts

KATHMANDU, AUG 21 -

Nepal Stock Exchange (Nepse) on Wednesday lost 17.91 points to close at 995.71 points. This is the first time since July 8 the benchmark index has fallen below 1,000 points.

Stockbrokers attributed the fall to the central bank’s cap on banks and financial institutions’ (BFIs) investment in stocks. The directive issued on Wednesday limited BFIs’ investment in shares to up to 1 percent of their core capital.

The capital market, which had been marching upwards for over a year, started to fall three weeks ago after stockbrokers failed to settle transaction in time inviting action from Nepse. Also, poor fourth-quarter results of some banks, including Grand Bank Nepal, affected investors’ sentiments.

Narendra Raj Sijapati, president of Nepal Stockbrokers’ Association, said the central bank directive hit investor confidence. “This resulted in high selling pressure, pulling down the market significantly,” he said.

Sijapati, however, ruled out any possibility of the market getting into a downward spiral. “The transaction volume is still high. The market should move up in the days to come,” he said.

Pralhad Kumar Oli, managing director of Pragyan Securities, echoed Sijapati. “Had NRB lowered the limit gradually, it would not have affected the market to such an extent.” On Wednesday, almost all trading groups witnessed fall in their indices. The insurance sub-group was the biggest loser, followed by hydropower, hotels and banking groups.

Source: The Kathmandu Post