Retail investors rushed to sell shares fearing a further drop in prices sending the Nepal Stock Exchange (Nepse) plunging 64.55 points to a six-and-a-half-month low of 1,469.48 points on Sunday.

Nepse began seeing selling pressure right after trading opened at 11 am. By 11:46 am, the index had slid 3 percent prompting Nepse to halt trading for 15 minutes. The slide continued after trading resumed at 12:01 pm, hitting a low of 1,478.55 points.

Stocks recovered slightly pushing the Nepse to a height of 1,515.25 at 12:54 pm. But the recovery was short-lived, as selling pressure began again. The market finally closed 4.21 percent lower.

The country’s sole stock market has been witnessing strong selling pressure for the last two weeks. Last week, the Nepse shed 124 points.

“The Nepse has lately been ending the days in the red as retail investors fear stock prices will come down further. So panic selling has gripped the market,” said Satish Kumar Shrestha, managing director of Siprabi Securities.

“While retail investors are dumping shares, institutional investors have deferred buying plans, assuming share prices will fall further.”

Also, some investors who had acquired bank credit to purchase shares when the stock market index was at its peak have started offloading shares, as many are finding it difficult to service their debts.

Since selling pressure has outstripped demand pressure, stock prices are declining, causing the index to slide, according to Shrestha.

Niraj Giri, spokesperson for the Securities Board of Nepal (Sebon), said the regulator was keeping an eye on possible foul play in the market. “Wild fluctuations are normal in a stock market like ours where there is a large number of small investors who react instantly when the market follows a bearish trend,” he said. 

On the first trading day of the week, the turnover amounted to Rs964.56 million. Shrestha said that this was a reasonable trade volume and that it showed that there were still investors who held hope for returns from the capital market.

Market capitalisation reached Rs1,634.74 billion, which means Rs71.8 billion was wiped out in market valuation in a single day. While shares of 119 companies were traded, only five companies, namely Green Development Bank, NB Insurance, Oriental Hotels, Ridi Hydropower Development Company and Tinau Development Bank, were gainers.

Everest Bank topped the list in terms of turnover with transactions worth Rs111.24 million.