It became a historic day for the Nepali stock market. On that day, the Nepse index had reached 3203.43 points. Even though the Nepse index set a historical record, investors took it as normal.
This is because the Nepse index was continuously maintaining new heights even before August. The next day, the Nepse index, which had crossed 3200, fell by double digits. This was also taken as normal by the investors. The Nepse index also declined on the third day, which investors called a general correction.
After a few days, the market rose by double digits, which investors described as a ‘bullish’ post-correction. In the language of the stock market, a continuous rising of the market is called a ‘bullish’ trend and a declining trend is called a ‘bearish’ trend. But the next day, the market fell. The decline did not stop even after the Nepse, which has crossed 3200, increased and fell.
As the Nepse index plummeted to 2900, some stock market analysts said that the market has the support of 2800. But that support was also broken. The decline in the Nepse index has not stopped. The market continued to rise and fall. The rise or fall of the market is a normal process for the stock market. The Nepali Stock Exchange is open five days a week except for public holidays.
If we look at the data from the second month of the current fiscal year, the market has increased on one day after declining on an average for three days. After falling by 300 points, the market has risen by less than 100 points. As the big numbers increased, so did the small numbers. As the market declines, stock market insiders say it’s just a ‘correction’. It should be understood that a correction in the stock market means a slight increase and a slight decrease. But a lot had happened here. Nowadays, stock market experts say that one of the main reasons for the market’s decline is the cap on equity loans.
The monetary policy brought by the National Bank has made provision not to take share pledge loan of more than Rs. 120 million maximum. In order to increase the access of small investors by minimizing credit risk of margin nature from banks and financial institutions to share securities, an arrangement will be made for such person or institution to take such loan up to a maximum of Rs. 40 million from a financial institution and up to a maximum of Rs. “It simply came to our notice then. One day after this arrangement of NRB, the stock market rose well. After that, the market started declining more than rising.
Another reason cited by stock market experts is the lack of investable funds in banks and financial institutions. The effect of liquidity in banks is definitely on the stock market. It can be easily estimated that the amount that could not be invested elsewhere due to corona due to corona has also increased due to investment in the stock market. However, the impact was also felt in the market when the lockdown was open in the country and the limit of loans for share pledges was also fixed.
The stock market is a risky market. Investing here is based on risk. Those who invest wisely are likely to make a profit, and those who invest wisely are likely to lose out. In the first quarter of the monetary policy review, investors had a natural expectation that the tightening of the collateral lending would ease. This is because the secretariat of Finance Minister Janardan Sharma had brought out the news that the Finance Minister had requested to correct the difficult policy regarding the stock market. On 10 December, NRB reviewed the monetary policy but did not follow the stock market policy.
The monetary policy was made public on Friday, the effect of which was seen in the stock market on Sunday. The stock market rose to an all-time high on Tuesday after a monetary policy review was made public. Even after the monetary policy was announced and the market rose on Tuesday, there were many incidents that caused turmoil in the stock market. Former Prime Minister Pushpa Kamal Dahal Prachanda’s speech was the most talked about.
Chairman of the CPN-Maoist Center Prachanda said that the capital market was a new form of imperialism and it was unfortunate that the investment of capital was in the capital and not in the industry. The remarks, made by Janardan Sharma, leader of the ruling Maoist party, while leading the finance ministry, sparked a debate on the stock market.
Vice-Chairman of the National Planning Commission Bishwa Poudel refuted Prachanda’s statement while the Vibekshil Saja Party issued a statement objecting to it. On Monday, Finance Minister Sharma said in a public forum that he was positive about the stock market and that Prachanda’s secretariat would also take initiatives to protect the investment of small investors. After all the activity on Monday, there was a lot of excitement in the stock market on Tuesday.
The stock market has not only risen at a normal pace, but it has also risen. Due to three positive circuit breaks, full-time trading could not take place in the market. Tuesday’s market has done a great job of forgetting these incidents that have been seen in the stock market since August. Many investors are now waiting for the market to return.
How did the market rise so much on Tuesday? The answer to this is not only the increased number but also the number of shares traded and the transaction amount that can be understood. If you sell shares cheaply, the price will go down. If I sell it at a high price, then I will not sell. This means that either the market will increase or the market will remain stable. Trading should be for the price to rise or fall.
Tuesday’s trading volume is less than half of Monday’s. This means that sellers are cheaper