Investors lost more than Rs9 billion in a single day of transactions as share prices tumbled on Thursday. The daily transaction amount in the secondary market dropped below Rs500 million, thelowest in three months, due largely to the soaring interest rates being offered bycommercial banks.

The Nepal Stock Exchange (Nepse) responded positively to the newly formed government on Tuesday with a rise of 35 points.

However, the market fell 22.18 points in two consecutive days. The market turnover, which had been hovering between Rs800 million and Rs1 billion, came down to Rs489.7 million on Thursday as the Nepse index on fell 7.94 points to close at 1,615.19 points.

With the downfall in shares prices, the investors lost more than Rs25 billion over the last two days of transactions.

The market capitalisation dropped to Rs1,889.69 billion from Rs 1,915 billion over the period.

Stockbrokers and investors have attributed the economic factors rather than the political reason behind the significant downfall in Nepse.

Narendra Raj Sijapati, managing director of Kalika Securities, attributed the downfall to the soaring interest rate being offered by the banks. “Most of the investors are considering an option of keeping their money in banks than to invest in the capital market,” he said. “As it ensures the risk-free investment with a good return triggered by the high interest rate, investors are reluctant to invest in the secondary market.”

Aatma Ram Ghimire, president of the Nepal Investors’ Forum, echoed Sijapati.

Ruling out suggestions that political scenario had bearings on falling Nepse, Ghimire said the change in government could post only a short-term impact.

Ghimire pointed out the persisting shortage of loanable funds with the banks, increased supply of stocks with a number of companies announcing distribution of right and bonus shares at Nepse and high interest rates offered by banks even on the saving account as core factors for the latest slide.

“Besides, an estimated Rs15 billion that is being invested for the establishment of new insurance companies has also affected the market adversely,” Ghimire added.

On Thursday, almost all the sub-indices of trading groups landed in red zone. Hotels, with a drop of 40.46 points, was the top loser, followed by insurance and manufacturing. Commercial banks that hold dominant share in the secondary market, also witnessed a fall of 7.41 points.

RSDC Laghubitta Bittiya Sanstha was the biggest gainer on the day, saw a 9.97 percent rise in its share value, while Progressive Finance Limited was the biggest loser with a 6.5 percent fall. Standard Chartered Bank recorded the largest turnover of Rs36.66 million.