Turnover in the secondary market fell below the Rs400 million mark on Tuesday due to selling pressure. Stockbrokers said it was probably the lowest single-day trading volume on the Nepal Stock Exchange (Nepse) in the last one and a half years.

Although stocks jumped on Sunday and Monday after the market opened following the New Year, the Nepse index plunged by double digits on Tuesday. The Nepse lost 26.03 points to close at 1,456.82 points. As the index dived, the volume of transactions during the day reached a mere Rs397.3 million.

“Besides an overwhelming pressure to sell, investors were reluctant to buy shares as they expected prices to fall even more sharply in the future,” said Anjan Raj Poudel, managing director of Thrive Brokerage House. According to him, the further public offering (FPO) that Nepal Life Insurance is scheduled to conduct next week has also affected the market. 

Nepal Life Insurance will be selling 3,096,000 units of shares at the FPO starting on January 11. It has fixed a premium price of Rs1,425 per share.

Poudel said many investors were trying to sell their shares in order to subscribe for shares at the insurance company’s FPO. “At a time when most companies have already declared their returns, investors have been considering the company’s FPO as one of the best investment opportunities.”

Weak demand at the secondary market has also been blamed on the FPO conducted by the State Bank of India last week. The bank witnessed massive oversubscription as investors applied for shares worth Rs4.8 billion against the issuance of Rs65.8 million.

“A large amount of investor money has also been stuck in the subscription for shares at the bank’s FPO, affecting demand in the secondary market.” The capital market has been observing a bearish trend for more than two months. Since March 2016, shares worth around Rs1 billion have been traded on the Nepse daily. But that figure has now fallen to around Rs500 million.

The Nepse rose 22.34 and 17.13 points on Sunday and Monday respectively, giving some hope to investors at the beginning of the New Year. However, the average daily turnover stood at Rs540 million reflecting a dismal performance.

“Despite a rise in the Nepse, the volume of transactions was not encouraging enough to attract more investors to the market,” said Poudel.

Along with the Nepse, the indices of almost all subgroups observed a downturn on Tuesday. The insurance index plunged 216.96 points, followed by commercial banks (down 26.94 points), hotels (down 25.29 points) and development banks (down 24.3 points). Arun Finance was the top gainer with a rise of 9.89 percent in its share price. Sajha Bikas Bank witnessed the biggest fall of 7.3 percent in its share price.