KATHMANDU, 27 OCT 2014 Â – After a steep rise until the end of the last fiscal year, the share market fell 122.3 points in the first quarter of this fiscal year.
Incidents like stockbrokersâ€™ failure to timely clear transactions, the central bankâ€™s directive to cap speculative share investment by banks and financial institutions, and confusion among investors over dematerialisation of share certificates contributed to the fall, experts say.
The market, which opened at 1,045.89 points on July 17, the first day of the first quarter, closed at 923.59 points on October 16.
First, the brokers failed to timely clear the heavy transactions following the presentation of the budget, affecting investorsâ€™ sentiment.
Then, the central bank on August 21 directed BFIs to lower their investment in shares (held for trading securities) to 1 percent of their core capital. This pushed the market further down.
And lately, investors are in a confusion after commercial banks were ordered to dematerialise their shares and adopt electronic clearance system.
â€œBesides, the festive season also contributed to the fall,â€ said Pralhad Kumar Oli, managing director of Pragyan Securities.
The Nepal Stock Exchange (Nepse) saw high fluctuation in both the benchmark index and turnover over the review period. The benchmark index hit six-year high of 1,083.55 points on July 21, posting its highest single-day turnover of Rs 1.2 billion.
The upward momentum of the market during the few initial days of the fiscal year was attributed to the budget that talked about initiating second generation economic reforms, Nepse allowing stockbrokers to use multiple log-ins for stocks transaction, and surplus liquidity with BFIs.
â€œThe rising confidence of investors at that time also helped the index as well as market transaction skyrocket,â€ said Oli, adding investors were then expecting the Nepse index would surpass its previous record of 1,175 points on August 31, 2008.
The market, however, started falling since then, hitting its three-month low of 875.56 points on September 7.
On October 6, the first day after Dashain holidays, Nepseâ€™s turnover fell to mere Rs 100 million. This was blamed to â€œDashain hangoverâ€ among investors and confusion over dematerialisation of share certificates.
The indices of almost all trading groups dipped in the first three months of the fiscal. The biggest lower was the hydropower group, down 658.41 points. The commercial banks sub-index dropped to 815.41 points from 957.63 points.