The Nepal Stock Exchange (Nepse) on Wednesday welcomed the election of new Prime Minister Pushpa Kamal Dahal by shedding 12.75 points in what appears to be a repeat performance of its reaction during his first stint as prime minister in 2008.

On the first trading day after Dahal became prime minister in 2008, the Nepse plunged 18.34 points.

However, stockbrokers and investors say that a change in government was a small factor and it was actually market correction after a steep climb.

The secondary market has been on a downhill course for the past four days ending a bullish trend lasting several months. The market opened at 1,826.28 points and slipped below 1,800 points in the first two hours of trading before closing at 1,813.72 points.

When Dahal assumed the prime ministership on August 18, 2008, the index had fallen to 1,057.53 from 1,075.87 points. The Nepse has dropping in the double digits from the beginning of the week. The index has lost 64.21 points over the period.

Along with the index, the volume of transactions has also shrunk. The daily market turnover that used to hover around Rs2 billion came down to Rs1.24 billion on Wednesday.  

During the last four days, investors have lost Rs68.76 billion as market capitalization fell. Market capitalisation stood at Rs2,067.12 billion which dropped to Rs1,998.36 billion on Wednesday. The Nepse has been falling since July 25 when KP Oli resigned as prime minister. Aatmaram Ghimire, president of the Investors’ Forum, considered the fall as market correction. According to him, it is usual for the market to see a drop after gaining a peak in a short time. “However, some fear was seen mainly among new investors regarding the change in government policies after the formation of a new administration,” he said.  

Narendra Raj Sijapati, managing director of Kalika Securities, said, “The market is likely to go upward in the future,” he said.