The government today urged investors not to panic as the share market has been ‘unnaturally’ looking down.

Speaking at a press meet joint secretary at the Finance Ministry Krishna Prasad Devkota said that the government was aware of the unnatural plunge of the stock market. “But the government is cautious of not creating a situation where the market would further deteriorate.”

The Nepal Stock Exchange (Nepse) plunged by 37.62 points in the intra-day trading yesterday, creating a fear in the investors. Earlier, in September 2008 the market had nosedived in such a way.

“The ministry is carefully watching the market,” he said, adding that it would not let the situation go out of hand

Some of the investors have been blaming the central bank for the plunge in the stock market, whereas others are blaming the big players of playing foul.

The central bank has directed fixed one per cent threshold of ‘held-for-trading shares’ for the banks, Devkota, who is also the chairman of Nepse, said, adding that the central bank has already clarified that the move is to discourage only the short-term trading rather than all types of investment.

The big investors have been cornering the stocks by spreading fear psychology on the small investors, as the stock market seemed to break the record of earlier 1,175 points.

Asking the small investors not to panic, Devkota suggested not to be carried away by the rumours as it will only benefit the big investors.

The ministry is in close contact with the central bank and Securities Board of Nepal, he added. “These institutions will come to action, if the market seems going out of hand.”

The market movement is a regular process, and the ministry will not intervene within the jurisdiction of the regulators of the capital market and financial market, until it is too necessary, he said, lauding the regulators.

However, the investors blamed the capital market regulator for its inefficiency. “The capital market regulator Sebon and Nepse as the front line regulator both are inefficient,” Nepal Investors Forum chairman Raj Kumar Timilsina.

“The regulators should close their offices, if they cannot protect the interest of investors,” he added.

Likewise, Stock Brokers Association of Nepal president Narendra Sijapati also cautioned that the sudden plunge in the stock market is not a good sign. “The market is falling for no particular reason,” he said, cautioning the investors to be careful while selling stocks in haste.

But former central bank governor, on the occasion, defended the central bank’s move. “The central bank directive to bank and financial institutions on capping the stock investment for short term is intended to ensure their fiscal health,” he said, adding that the move was not directed to impact the stock market. “Thus investors should not hurry to offload their shares.”

Market further plunges
Despite the government assurance, the stock market plunged further at the end of the day’s trading. The Nepse index dropped by 25.98 points to close the day’s trading at 921.86 points. Except Hydropower sub-group, the sub-groups ended in the red zone today. The hydropower sub-group gained 66.5 points to close at 2,428.47 points. But the Insurance sub-group became the highest loser with 88.06 points drop to close at 3,594.99 points. Likewise, banking sub-group shed 39.4 points to close at 830.43 points.

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