NEPSE falls below 500
KAHMANDU, Feb 08 - The Nepal Stock Exchange (NEPSE) index plunged to a three-year low of below 500 points on Sunday as the bearish trend continued in the capital market.
The index dropped by 4.06 points on Sunday to settle at 497.34 points. The NEPSE had reached 494.59 points on April 12, 2007. The capital market index had soared to 1175 points in September 2008.
"The number of shares is growing every day, but the number of investors is limited," said stock analyst Rabindra Bhattarai. "The index will go down further if the number of investors does not go up," he added.
President of the Nepal Stockbrokers Association Nanda Kishore Mundada said that there was no attraction for people in the share market. "That's why the market is seeing a bearish trend."
"The interest rate that banks provide is higher than the dividend investors get by investing in the share market," he said. "That's why people are not attracted to the share market."
Analysts said that Nepal Rastra Bank's (NRB) recent strict measures against margin lending, talk about 19 percent of promoter shares entering the market and the government's decision requiring investors to have Permanent Account Numbers were the reasons behind the falling lure of the stock market. The number of listed shares has increased by 53.17 percent during the first six months of the fiscal year 2009/10 against the same period last year. The NEPSE, however, plummeted by 56 percent during the same period. The number of shares on the market increased with initial public offerings and distribution of bonus and rights shares.
The listed companies have been allowed to issue rights shares worth Rs. 5 billion until Jan. 3, 2010. Rights shares worth Rs. 11 billion were allowed to be issued in the last fiscal year.
The government has also started taking an interest in the decreasing trend of the share market. It has been working to bring institutional investors in the share market. But institutional investors are not showing interest to invest in the market due to the bearish trend.
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