Rs 11 Billion Turnover in One Hour Indicates Profit Booking; Experts See Long-Term Market Growth

The Nepal Stock Exchange index witnessed transactions worth around Rs 11 billion within just one hour of trading on Tuesday, the second trading day of the week.

The one-hour volume is significantly higher compared to the recent trading trends.  Total turnover on Monday, the first trading day of the week, stood at Rs 555 million while the average daily turnover last week was approximately Rs 6 billion. The record singly day-turnover in recent months was approximately Rs 30 billion around 19 months ago when the market breached the 3000-level mark.

The unusually early high turnover indicates a selling pressure in the market as the index remained on a downward trend after trading opened at 11 am. However, the market gained around 36 points during the pre-open session.  

The surge in trading volume comes a day after the market surged by 6% on Monday, prompting a final (third) circuit breakers and leading to a permanent halt in trading for the day.

Market participants attributed the dramatic surge to the landslide victory of the Rastriya Swatantra Party in ongoing the House of Representatives elections. RSP has managed to draw the attentions of market participants for prioritising capital market reforms in its election manifesto.

Capital market experts said frequent government changes in the past created policy uncertainty, affecting both economy and the capital market of the country.  

Political stability is a key component in consolidating economy and boosting the capital market, they said.

Stock market analyst Ramhari Nepal said the strong rally on Monday was largely driven by positive sentiments of market participants following the election results.

However, he pointed out the lack of any substantial change in just a few days, in terms of policies or listed companies’ performance, which often results in a temporary surge in the market.

“Events-driven confidence often leads to a temporary market push. For sustained growth, factors like excess liquidity, low interest rates and most importantly better companies’ financial performances are needed,” he said, describing today’s decline as a market retracement.

“For real and sustained growth, investors should be ready to buy fundamental stocks even at higher prices,” he said.

Despite the short-term correction, he saw the market growth ahead. “I can expect the market to have sustained growth in the long run if political stability follows the election results,” he said.

Chartered accountant and stock market analyst Manish Aryal also viewed today’s market movement cautiously. He described the sharp fall accompanied by high volume as a “dump” at the current stage.

“The market surged a staggering 162.93 points to close at 2875.43 points on Monday. If buying activities take over later in the session and the market recovers within 20-30 points, it would indicate a healthier correction,” he said.