The market volatility follows a decision by CDS and Clearing Limited (CDSC) to consolidate the ISIN codes for promoter and ordinary shares into a single code. While the move resolves long-standing technical hurdles that prevented founding shareholders from trading their shares after the expiration of their lock-in periods, it has unleashed a massive wave of previously stalled promoter shares into investors' demat accounts.
The resulting supply-demand imbalance has hit company valuations hard. The share price of Emerging Nepal has plummeted by more than 30 percent, while Kalinchowk Darshan has seen a drop exceeding 15 percent. Market analysts note that shares of both companies are experiencing extreme volatility amid concerns that the supply influx is outpacing market absorption capacity.
Adding to the selling pressure, major fundamental shareholders of Emerging Nepal have officially initiated steps to offload large blocks of stock. Under Securities Board of Nepal (SEBON) directives, primary shareholders intending to sell 5 percent or more of their holdings must provide a 15-day prior notice. Accordingly, six key foundational shareholders have formally announced their intention to sell approximately 8.57 lakh units of shares over the next three months.
According to disclosures handled by company secretary Ramesh Bhandari to NEPSE, SEBON, CDSC, and issue manager NIC Capital Limited, the share sale details for the six fundamental shareholders include:
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United Distributors Nepal Ltd: 2,62,500 units
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Regency Trading Pvt. Ltd.: 1,67,235 units
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Nikunj Agrawal: 1,66,680 units
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Bishal Agrawal: 1,00,000 units
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Anuj Agrawal: 91,674 units
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Jagadish Prasad Agrawal: 69,450 units
Previously, the shares of these companies traded at elevated levels due to a restricted float of ordinary shares. However, the sudden influx of millions of shares—combined with signals that prominent insiders are seeking to exit—has generated widespread disappointment and a negative psychology among retail investors.
While regulatory notice requirements are designed to enhance transparency and protect small investors from sudden insider dumping, the sheer volume of shares entering the market has left the short-term trajectory of both stocks heavily dependent on how and at what pace the primary shareholders execute their sales.
