The Nepal Stock Exchange (Nepse) shed 16.14 points on Sunday, the first trading day after the Dashain holidays. The index dropped as the market felt selling pressure from those seeking to book profits and investors became cautious over fears of a possible hike in interest rates on margin loans with the fall in the level of excess liquidity in the banking sector, market analysts said.

With a fall of around 0.89 percent on the index, the market closed at 1803.74 points. During the week just before Dashain, the index had surged 66.5 points to close at 1819.88 points.

“The index fell because investors rushed to book profit as prices of stocks had soared right before the market closed for Dashain holidays,” said Parmeshwor Bhakta Malla, managing director of Malla & Malla Stock Broking Company. “This is basically a correction.”

Individual investors, however, reacted differently to Sunday’s market fall.

Aatma Ram Ghimire, president of Nepal Investors’ Forum, said rumours that banks will soon raise interest rates on margin loans because of a gradual fall in the level of excess liquidity in the banking sector may have hit investor sentiment.

Declaration of dividend by many listed companies also affected investor sentiment, according to Ghimire. “Most of the banks, among others, have already declared their dividends for this year. This has reduced demand for shares,” he said.

Ghimire, however, said low level of participation from investors on the first trading day after the Dashain festival could also have affected the market. “As many investors are yet to come back from holidays, there was low demand for shares today,” he said.

On Sunday, all sub-indices dropped causing the overall index to fall.

Insurance sub-group witnessed the largest fall of 81.46 points and closed at 9,269.66 points. Stockbroker Malla said even a small variation in demand for insurance stocks causes the sub-index to fluctuate heavily because the number of stocks in this sub-group is relatively lower. Other big losers were hotels, hydropower and banking sectors.

 Among individual companies, Purnima Bikas Bank was the biggest loser, as it shed 4.4 percent to close at Rs482. Jyoti Bikas Bank, on the other hand, ended Sunday’s trading as the top gainer, adding 9.89 percent to its value.

Kumari Bank’s shares were the most traded stocks, recording 843 transactions. On Sunday, shares worth Rs600.9 million changed hands at Nepse.