Stock Market Since It’s All-time High. Will It Get Back Again?

~Samikshya Wagley

Nepal Stock Exchange (NEPSE) is the only securities trading platform in Nepal. NEPSE's primary goal is to provide government and corporate assets with free marketability and liquidity by enabling transactions on its trading floor through members, and market intermediaries such as brokers and market makers. On January 13, 1994, NEPSE debuted the trading floor.

“The stock market is a device to transfer money from the impatient to the patient”.

                                                                                               -Warren Buffett

Equities are a very volatile asset class and require a lot of patience and tenacity to continue investing in or holding equity/equity funds, even if the market is flat or long-term down. Impatient investors put money into the market and reduce withdrawals. Patient investors will be rewarded for their patience as prices rise over time. The market almost always favors patients rather than inpatients.

The NEPSE index increased by 0.80% on the first trading day of the week ending May 8, 2022. The NEPSE index, which includes subfamilies excluding the increase in commercial banks and microfinance, closed at 2,256.54 with a turnover of Rs 1,326,421,671.7, up 17.95 points.

On August 18, 2021, the NEPSE had set a new all-time high at the closing index of 3,198.60 with a turnover of Rs 21,313,489,269.00 in its history. As a result, NEPSE appears to have lost 29.45% of its value since its all-time high.

NEPSE has seen a lot of red over the past few months. There is a difference of 942.06 points from the all-time high of the Nepal Stock Exchange Index so far. A total of 41 shares are traded below 50% of the closing price on August 18, 2021.

NEPSE is trading with the maximum loss of 67.11% on GUFL and 66.42% on MFIL, both shares are classified in the financial sector, while the development bank GRDBL loses exactly 50% from LTP as of August 18, 2021. These stocks are down more than 50% as NEPSE is down 29.45%. These are high beta stocks and can benefit trading due to price volatility but at higher risk.

Beta is a term that quantifies the expected movement of stocks in relation to market movements. If the beta is greater than 1.0, it means that the stock is more volatile than the wider market, and if the beta is less than 1.0, it means that the company is less volatile. Short-term risk is probably better measured by beta than long-term risk.

Sector-wise percentage decline in sub-indices.

Low beta indices, like banking, hotel and tourism, microfinance, manufacturing and processing, and others, as well as mutual funds, have reduced risk and are hence better for long-term investing. These sectors appear to be less volatile. Similarly, as the percentage change in indices is bigger than the percentage change in the NEPSE Index, which signifies strong price fluctuation, trade, development banks, hydropower, finance, non-life insurance, life insurance, and investment may be favorable for trading.

Some investors are concerned when the market begins to fall. However, there are many ways to take advantage of the market downturn, so you don't have to act out of fear. Learn to stay calm and trade at falling prices. In the downmarket, finding dividend stocks is a great way to find value. A company's stock price can go down, but that doesn't necessarily mean that the company's fundamentals are meaningless. If your company's balance sheet is strong, you can pay dividends.

A fall in the stock market will reduce the value of both fundamentally strong and fundamentally weak stocks, but a fundamentally healthy company could recover. If you can find a strong company, price cuts can be a great buying opportunity.

Dear reader, what do you think, Will ATH price Get Back Again?