Nepal Stock Exchange (Nepse) index lost 37.62 points – 3.82 per cent – to close the market at 947.84 points today due to psychological fear created by mis-information of the central bank’s latest diktat.
The largest intra-day trading loss attracted circuit breaker twice, first for the 15 minutes and second for half-an-hour. The market resumed its trading at 2:26 PM after half an hour suspension.
Nepse attracts circuit breaker, if it goes up or down by three per cent within half an hour, four per cent within two hours and five per cent during trading in a day. After the five per cent upward or downward change, the trading for the day is suspended for that day.
According to the rule, the secondary market was suspended for 15 minutes as it lost three per cent first and for half and hour as the Nepse plunged by four per cent second time.
The secondary market has started looking up after the second Constituent Assembly (CA) election due to investors’ confidence on liberal government.
Some experts claimed the sudden huge drop as market correction while others termed it as a foul play between the brokers and ‘big players’ on the back of central bank diktat. Stockbrokers, however, claimed that investors became cautious after the central bank diktat to allow commercial banks and financial institutions to invest only one per cent of total paid-up capital into shares and bring it down to one per cent by mid-July.
The move instigated panice selling, according to the brokers. But the central bank has not clamped long-term stock trading, it has only discouraged the short-term trading for the banks and finance institutions.
The Nepse dropped as eight sub-groups – except Manufacturing – ended today in the red zone.
The biggest grosser of recent months, insurance sub-group was the highest loser today as its sub-index plunged by 264.74 points to close the market at 3,683.05 points.
Similarly, the market propellers – hydropower and banking sub-groupsalso lost 140.84 points to finish at 2,361.97 and 36.7 points to close at 869.89 points pulling the overall Nepse index down.
Life Insurance Company declined by 9.97 per cent to Rs 3,322, Asian Life Insurance slid by 9.56 per cent to Rs 927 and Prime Life Insurance fell by 9.28 per cent to Rs 821 per unit stock.
Likewise, Reliable Development Bank lost 9.4 per cent to Rs 212 and Miteri Development Bank lost 9.2 per cent to Rs 454.
However, three finance companies and two development banks gained. Paschimanchal Finance climbed by 9.61 per cent to Rs 251, Multipurpose Finance surged by 9.32 per cent to Rs 129 and Manjushree Finance jumped by 3.7 per cent to Rs 140. Similarly, Nagbeli Laghubitta Bikas Bank surged by 9.98 per cent to Rs 1,025 and Birta Laxmi Bikas Bank gained some 8.93 per cent to close at Rs 244 per unit of share.
But the market witnessed some 2,726 transactions of Rs 440.84 million.