Nepse rises only to fall

ShareSansar, August 26:

Despite assurances from the regulators, the market could not close in the green terrain today, and the benchmark index lost 2.74 percent to close at 921.86 level. Nepse index that stood at 947.84 level when the market opened today, rose to 962.47 level, driven by surging demand by 12:30 pm. However, the demand gradually fell thereafter.

Nepse is on a downward spiral for the past two days because many investors are gripped by panic following rumors that institutional investors would off loan stocks in bulk following the latest directive of the central bank.

Nepse index had shed 3.82 percent yesterday.

All the sub-indices, except Hydropower, ended in the red zone as the investors’ confidence ebbed.

Nonetheless, the market today was much better than yesterday going by the market turnover, which rose to Rs 51.75 crore as compared to yesterday’s volume of Rs 44.08 crore.

Notwithstanding the panic in the market, key stakeholders and regulators strongly feel that the market should rebound in days ahead because it is both fundamentally and technically sound.

Only this morning Nepse Chairman Krishna Prasad Devkota has urged general investors not to panic and start off-loading their stock, which will not only harm them but also the only secondary market of the country.

He further assured the investors that the government as well as the regulators won’t let the market fall below a certain point, and would even intervene if need be to stabilize the market.

Technically, too, Nepse graph suggests that the downfall from the 1083 level is just another normal correction following the local bourse rally from 754 level.

After series of downfall and massive plunge of more than three percent on Monday, the Nepse index has now breached the oversold zone of 30 level on RSI oscillator. Currently, the benchmark index stands at 25.64 level on RSI oscillator, which is very much a reversal zone.

In addition, most of the sub-groups’ RSI level are also hovering below the oversold zone, indicating the overall stock market of Nepal is on oversold or reversal zone.

So, most of the smart investors will take this correction as buying opportunity, following a series of bullish rally in past months, rather than selling in panic.

Sebon also says that it has been closely monitoring the market, especially the buying and selling orders, and that it thinks the only reason the market is falling is due to panic since the institutional investors are not doing rushing to square off stocks.

Irrespective of these attempts to boost investors’ confidence, Banking sub-index lost 39.4 points, Insurance 88.06 points, Manufacturing 36.32 points, while the Others, Finance and Development Bank groups shed 9.4, 5.53 and 1.56 points respectively.

Hydropower group, however, posted an impressive gain of 66.5 points after taking a heavy battering over the past few days.