Daily turnover at Nepse dips by 50 percentDaily transaction volume at the stock market has plunged by around 50 percent in recent days, as investors are expressing reluctance to purchase shares on expectations of further drop in prices.
Daily transaction volume at the stock market has plunged by around 50 percent in recent days, as investors are expressing reluctance to purchase shares on expectations of further drop in prices.
Since March, shares worth around Rs1 billion have been traded on Nepal Stock Exchange (Nepse) per day. But that amount has now fallen to around Rs500 million.
The turnover amount on Wednesday, for instance, stood at Rs548.31 million. And on Tuesday, the amount fell to as low as Rs405.55 million. On average, the daily turnover hovered around Rs657 million last week.
The single day transaction volume had surpassed Rs1 billion for the first time on March 14, as confidence of investors towards stock market soared.
As of now, the biggest single-day turnover at Nepse was recorded on July 27, when shares worth Rs2.78 billion were traded.
Stockbrokers have attributed the latest fall in transaction amount to reluctance shown by big investors to purchase shares.
“Many investors are expecting share prices to drop further, so they are waiting to purchase shares at even lower prices,” said Anjan Raj Poudel, managing director of Thrive Brokerage. “Even those willing to place buy orders are quoting low prices for shares up for grabs.”
Because of lack of enthusiasm in the stock market, Nepse index has been continuously falling for the last few weeks. But until some time ago the falling index had not affected the daily transaction amount.
Poudel said declaration of dividends by listed companies was also a reason that was bringing down share prices and daily turnover amount.
“Almost all the companies, except for few insurance companies, have held
their annual general meetings or have closed their books. This factor is also playing some role in reducing demand for shares,” said Poudel, adding, “The market could continue to fall for sometime in future.”
Niraj Giri, spokesperson of Securities Board of Nepal, however, begged to differ. According to him, the sellers are also reluctant to sell the stocks, as they want to hold on to their shares hoping a turnaround in share prices.
“This shows panic has not gripped sellers even at a time when share prices are falling,” said Giri. “It indicates the market is heading towards maturity.”
Denying possible manipulation, Giri said Sebon will not intervene at this point and allow the market to function on its own.
“However, we are keeping a close eye on activities taking place on the stock market to avoid possible manipulation by big investors,” he said.