The index that was on 3198.60 points on August 18 has fell down by 23.40 percent i.e. 748.63 points to 2449.97 points by Thursday, December 9.
Along with the index, all sub-group indices have also gone down. In between, investment sub-indices has declined the most by 38.27 percent while Trading sub-indices has also logged 33.49 percent drop.
As per Mukti Aryal, the bad policy adopted by Nepal Rastra Bank has negatively affected the stock market. Apart from that, the liquidity crisis prevailed in the financial market also plays role in the downfall of the stock market, Aryal added.
Increasing interest rate is another reason for the downfall of the stock market. BFIs have increased the interest rate of both deposits and lendings due to the liquidity crisis which is not good for the stock market. Rise in interest rate always have a negative impact on stock market and vice versa.
Furthermore, NRB did not amend its policy on margin lending cap introduced in this years monetary policy. NRB has limited margin lending upto Rs 120 million through 4 BFIs have increased selling pressure from big investors who take such loans. Moreover, the investors who want to take margin lending are not getting such loans due to liquidity crunch in the market.
