Political polarization, quarter end pressure & oversupply taking toll on secondary market as it plummets by 32.64 points

The effect of political polarization is taking a toll on the Nepal Stock Exchange as investors dumped shares bringing down the index by 50 points during mid trading hours on Sunday. However, the market recovered slightly during the last trading hours before closing at 1510.01 points. Stock brokers and analysts cited the uprising of polarized political power and oversupply of shares as the major reason behind the fall in the market. “Although the fundamentals of the companies have not changed negatively overnight, the recent political developments have heavily influenced the investor’s psychology leading to a fall of such magnitude,” said Priya Raj Regmi, President of Stockbroker’s Association of Nepal, “Moreover, there is an oversupply of shares as companies are listing right and bonus shares.” According to Regmi, oversupply of shares is not an unusual event which can create an impact of such magnitude. However, the secondary market which is largely guided by rumors and sentiments is reeling under selling pressure because of political turn of events. Furthermore, declaration of low rate bonus shares by micro-finance companies along with investors who are under quarter end pressure to settle interest payments have created an immediate impact leading to a fall, analysts said. The market which opened at 1542 points saw a fall throughout the day and rose slightly to close at 1510.10 points with a turnover of Rs 41.49 crore. The indices of all nine trading group turned red at the end of the day with Insurance sector losing the most followed by Hotels, Development Banks, Hydropower and Banking sector. Mahuli Samudayak Lagubitta Bittya Sanstha Limited (MSLB) was the top gainer followed by Mission Development Bank Limited (MIDBL) and Saptakoshi Development Bank Limited (SKDBL). Likewise, Janata Bank Nepal Limited (JBNL),  Gandaki Bikas Bank Limited Promoter Shares (GDBLPO) and Nepal Life Insurance Company Limited (NLIC) topped the charts of top stocks by turnover.