The NEPSE shed 12.61 points to hit a four-month low of 1,178.46 points on Sunday. The index, which is an indicator of the performance of stocks listed on the Nepal Stock Exchange, had sunk to 1,181.09 points on April 9.

The market has been in free fall for the past five weeks which analysts blamed on the government's failure to implement policies. According to them, the market was also affected by a shortage of loanable funds with banks and high interest rates on loans.

Stocks plunged on Sunday after Finance Minister Yubaraj Khatiwada said that the government could intervene in the share market, according to a stockbroker. “At a time when investor confidence was growing, the finance minister’s statement has disheartened the market,” said the anonymous stockbroker.

Speaking at a programme on Sunday, Khatiwada said the ministry could step in if market regulators were reluctant to regulate the stock market. “The government is more concerned with achieving higher economic growth than boosting the stock market index,” said Khatiwada, adding that the government sought to strengthen the capital market.

The Securities Board of Nepal has often been criticised for its ineffectiveness in governing the market. Lack of coordination between the board and the Nepal Stock Exchange has been cited as the reason for the poor implementation of policies.

The NEPSE has lost 90 points in the last five weeks. Around Rs84.48 billion has been wiped out from the book value of stocks held by investors, with market capitalisation going down to Rs1,496.71 billion from Rs1,581.19 billion.

The index hit an all-time high of 1,881.45 points on July 27, 2016. Market capitalisation reached a record Rs1,981 billion and daily turnover also totalled a record Rs2.75 billion. Following the slump in the secondary market, daily turnover has been hovering around Rs300 million. “As was seen last week, investors had started purchasing shares of companies that had fallen to their lows,” said the stockbroker.

Analysts also blamed dubious government policies for the bearish mood in the secondary market. According to them, indecision over the calculation of capital gains, delays in the enforcement of proposed brokerage licences to banks, the government’s stern tax policy and delays in the implementation of margin trading have all helped to bring down the market.

Officials of the Securities Board of Nepal said that the regulator was making all efforts to enforce good governance in the secondary market.

“Despite trying to enforce the laws, some flaws were seen in coordination, technical glitches appeared in the software, and obstruction from government agencies also impeded the board’s plan to keep the secondary market on track,” said an anonymous board official.

Investors said the government’s apathy towards addressing the problems in the stock exchange had taken a toll on the market. Tulsi Ram Dhakal, vice-president of the Nepal Investors’ Forum, said the slow progress of a number of long planned measures had affected the market.

“Instead of working to enforce measures to boost the market, the government has been issuing controversial statements at public forums. This has harmed investor confidence,” Dhakal said.