Nepal Stock Exchange (Nepse) last week lost a whopping 86.22 points to close at 1,296.23 points, as the demand for stocks fell after banks tightened margin loans due to liquidity crunch.

It is the first time in 11 months the market closed below the 1,300-point mark.

The index posted losses throughout the week. Opening at 1,382.45 points on Sunday, it closed the day at 1,364.5 points—down 17.95 points. On Monday, the index slipped 15.66 points to close at 1,348.84 points. The losses continued for the following two days, as the index shed 4.24 points and 21.62 points, respectively, before posting the week’s largest fall of 26.75 points on Thursday.

As a result, the overall index declined by 6.23 percent over

the week.

“As banks are not extending adequate loans for stock investment due to liquidity shortage, it has adversely affected the demand for shares,” said Ram Krishna Tiwari, managing director of Oxford Securities. “Moreover, banks’ move to raise interest rates further affected the demand.”

Along with the Nepse, the sensitive index that measures the performance of group ‘A’ companies was also declined by 18.89 points to 281.46 points.

The total value of shares listed on the exchange declined heavily by Rs97.05 billion, with the market capitalisation reaching Rs1,458.43 billion from Rs1,555.48 billion over the week.

The group representing insurance companies posted the biggest decline of 677.68 points to close at 5,380.87 points. “As the insurance sector regulator is reluctant to increase paid-up capital requirement for insurance companies, investors expecting such a move were disappointed,” Tiwari said.

Hotels came second, as the sub-index fell 140.22 points to 1,628.13 points. Commercial banks lost 87.26 points, hydropower 68.6 points, development banks 61.43 points, finance companies 29.29 points and others 17.35 points.

The sub-indices of manufacturing and trading companies were non-movers at 2,161.86 point and 206.16 points, respectively.

Prabhu Bank posted the largest transaction of Rs109.49 million. “Investors are buying Prabhu’s stocks lured by low price amid a slump in the market,” Tiwari said.

Nepal Life Insurance came second in terms of the transaction amount (Rs77.81 million). Deprox Development Bank, Nepal Investment Bank and Everest Bank rounded out the top five.

Siddhartha Oriented Scheme led in terms of the number of shares traded—5,676,000 units.