This is the market’s biggest single-day loss this fiscal year. After the benchmark index slipped by 4 percent, Nepse even imposed circuit breaker for half an hour at 1:56 pm.

Panic selling ensued as investors feared the new central bank directive would prompt banks and financial institutions (BFIs) to offload their stocks. The Nepal Rastra Bank (NRB) has asked BFIs to bring down their share investment to 1 percent of their core capital by Mid-July 2015.

The stock market has been dropping points for the last one month, initially due brokers’ failure to clear transaction timely, and now on the central’s bank’s directive.

Niraj Giri, spokesperson for the Securities Board of Nepal, said the lack of clarity among small investors on the NRB’s directive was the main reason behind fall. “Although it’s time for the market to rise, lack of proper information seems to have affected the market,” he said.

Giri, however, said a few investors were complaining that big investors were spreading rumours of a downfall of the market after the NRB’s action. “Some of the investors even called me to know about the fact,” he said. Sebon has said it has been closely monitoring the development in the stock market.

Stockbrokers also say small investors have been panicking after the central bank directive. Santosh Mainali of Secured Securities said small investors were rushing to sell their stocks. Soon after the directive came out on Thursday, Nepse sank below 1,000 points.

Indices of those sectors in which BFIs have invested declined on Monday. According to the stockbrokers, most of the BFIs have invested in insurance and hydropower groups, in particular. Indices of the two groups fell 237.72 points and 152.39 points, respectively.

All trading groups, except for manufacturing, posted losses. The market saw transaction of Rs 440.84 million (899,925 shares traded), while the market capitalisation was Rs 967.76 billion on Monday.