KATHMANDU: The Nepal Stock Exchange (NEPSE) witnessed a significant decline of 44 points the past week, with market sentiment rattled by regulatory actions against Karnali Bikas Bank.
The drop occurred over four trading days, as concerns over the delisting of the bank spread panic among investors.
On December 25, Nepal Rastra Bank declared Karnali Bikas Bank as a problematic institution, taking over its management.
A day later, the Securities Board of Nepal suspended the bank’s trading on NEPSE until further notice, citing investor protection concerns. These actions triggered widespread anxiety, particularly within the development and finance sectors.
The market opened on Sunday with a sharp decline, losing 21.12 points to close at 2,609.58. Shares of 316 companies were traded, with a turnover of Rs 5.47 billion from 11.99 million shares traded.
The market remained closed on Monday for the Tamu Lhosar holiday but resumed trading on Tuesday, witnessing an even sharper fall. NEPSE dropped by 33.08 points, closing at 2,576.50 after trading 13.74 million shares worth Rs 5.67 billion.
Investor panic continued to dominate, driven by rumors on social media that other institutions with high non-performing loans (NPLs) could face similar actions.
Development banks and finance companies were hit hardest, with the development bank index plummeting by 142.35 points on Sunday and 145.10 points on Tuesday. The finance group saw similar declines, dropping 137.46 points and 152.44 points on the same days.
The week’s trading volume was limited, with 43.79 million shares changing hands for a total turnover of Rs 19.35 billion. The average daily turnover stood at Rs 4.83 billion.
Investor Gopal Katuwal highlighted the fragile nature of the Nepali stock market, stating, “Even minor regulatory actions can cause disproportionate panic. The delisting of Karnali Development Bank led to a chain reaction, as rumors about similar actions against other institutions fueled further sell-offs.”
Despite the mid-week turmoil, NEPSE saw a slight recovery on Wednesday and Thursday.
On Wednesday, the market rose marginally by 5.10 points to 2,581.60, while Thursday brought another small gain of 4.63 points, closing the week at 2,586.23. However, these gains did little to offset the losses from earlier in the week.
Experts believe that the market could stabilize in the coming weeks, with income tax filing deadlines approaching and regulatory uncertainties likely to subside. Until then, investor confidence remains fragile, and the stock market is expected to remain volatile.
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