Secondary market surges triggering circuit breaker
KATHMANDU, June 20:
The probable active participation of institutional investors in the secondary market has given a new lease of life to the ailing stock market as Nepse today went up by 15.46 points to 318.99 points.
However, the surge made secondary market to use circuit breaker thrice today. Triggered by the huge surge immediately after the market opened, the secondary market applied circuit breaker for the 15 minutes but the surge didnot stop forcing the market to apply another circuit breaker for half an hour and finally, the market halted trading at 2.45 aftrenoon.
The secondary market today witnessed only about two hours trading unlike a regular three hour trading due to circuit breaker.
The circuit breaker comes into operation and suspends the trading, if the Nepse index moves more than three per cent either way within the first half an hour of trading.
Similarly, the five per cent movement either way will trigger another circuit breaker of half an hour.
“The news of institutional investor’s entry in the secondary market might have boosted the investors’ confidence,” said MD of Nepal Stock Exchange Shankar Man Singh. “Hopefully the recovery will be sustainable,” he added.
The finance ministry has asked Employee’s Provident Fund (EPF), Rastriya Beema Sansthan and Citizens Investment Trust (CIT) to invest in the stocks to help revive the market after it dropped to 292.32 points on Wednesday last week.
The institutional savers are estimated to invest Rs 1.5 billion in the secondary market.
“The share prices have plunged so much that the investors might have also realised that buying shares right now is favourable,” said immediate past president of Nepal Brokers’ Association Nanda Kishor Mundada.
“The increased demand has propelled the Nepse up,” he said, attributing the central bank’s decision to revise the conditions for loans against shares as yet another reason for boosting the market confidence.
However, he also expressed doubts over sustainability. “Most of the investors have invested by borrowing from banks at 16 to 18 per cent interest rate as the return on shares do not exceed five to seven per cent currently, thus selling pressure still exists,” he said.
Mundada also didnot rule out manipulation by the large investors. “Some clever players in the market might also have pushed the prices up by creating artificial demand so that they can exit,” he said, cautioning the small investors.
The already bearish market’s downward slide was also propelled as the news regarding the failures of number of financial institutions in last two weeks.
However, today banking subgroup gained 18.05 points.
Similarly, Nepal Telecom gained Rs 25 per unit so that the others subgroup surged by 29.36 points. Hydropower subgroup also gained 20.92 points during the day’s trading.
Source: THT
The probable active participation of institutional investors in the secondary market has given a new lease of life to the ailing stock market as Nepse today went up by 15.46 points to 318.99 points.
However, the surge made secondary market to use circuit breaker thrice today. Triggered by the huge surge immediately after the market opened, the secondary market applied circuit breaker for the 15 minutes but the surge didnot stop forcing the market to apply another circuit breaker for half an hour and finally, the market halted trading at 2.45 aftrenoon.
The secondary market today witnessed only about two hours trading unlike a regular three hour trading due to circuit breaker.
The circuit breaker comes into operation and suspends the trading, if the Nepse index moves more than three per cent either way within the first half an hour of trading.
Similarly, the five per cent movement either way will trigger another circuit breaker of half an hour.
“The news of institutional investor’s entry in the secondary market might have boosted the investors’ confidence,” said MD of Nepal Stock Exchange Shankar Man Singh. “Hopefully the recovery will be sustainable,” he added.
The finance ministry has asked Employee’s Provident Fund (EPF), Rastriya Beema Sansthan and Citizens Investment Trust (CIT) to invest in the stocks to help revive the market after it dropped to 292.32 points on Wednesday last week.
The institutional savers are estimated to invest Rs 1.5 billion in the secondary market.
“The share prices have plunged so much that the investors might have also realised that buying shares right now is favourable,” said immediate past president of Nepal Brokers’ Association Nanda Kishor Mundada.
“The increased demand has propelled the Nepse up,” he said, attributing the central bank’s decision to revise the conditions for loans against shares as yet another reason for boosting the market confidence.
However, he also expressed doubts over sustainability. “Most of the investors have invested by borrowing from banks at 16 to 18 per cent interest rate as the return on shares do not exceed five to seven per cent currently, thus selling pressure still exists,” he said.
Mundada also didnot rule out manipulation by the large investors. “Some clever players in the market might also have pushed the prices up by creating artificial demand so that they can exit,” he said, cautioning the small investors.
The already bearish market’s downward slide was also propelled as the news regarding the failures of number of financial institutions in last two weeks.
However, today banking subgroup gained 18.05 points.
Similarly, Nepal Telecom gained Rs 25 per unit so that the others subgroup surged by 29.36 points. Hydropower subgroup also gained 20.92 points during the day’s trading.
Source: THT
