Investors in the country’s only stock market lost Rs174.19 billion in the last two months due to a sharp fall in market capitalisation at the Nepal Stock Exchange (Nepse) after share prices went into free fall.

On Wednesday, market capitalisation stood at Rs1,419.99 billion, down from Rs1,592.62 billion on April 26, according to Nepse. Market capitalisation hit a record high of Rs2,070.99 billion on July 7, 2016.

The Nepse index slipped below 1,200 points on Tuesday. Daily turnover has shrunk due to low demand for shares, from Rs1 billion a few months ago to Rs200 million in the past three weeks. The figure hit a record high of Rs2.19 billion on June 14, 2016.  

Stockbrokers attributed the sharp fall in share prices and transaction volume to large investors holding back mainly due to the upcoming monetary policy, an increase in the supply of stocks and high interest rates on margin loans.

“Investors are in a wait and watch mode as Nepal Rastra Bank is likely to issue a new monetary policy next week,” said a stockbroker who didn’t want to be named. According to the stockbroker, many investors are looking forward to investing in further public offerings slated to be made by NMB Bank and Nepal Bank shortly. While Nepal Bank’s further public offering will launch on Friday, NMB Bank has been putting off the issuance date.

The stockbroker said that announcements of initial public offerings by Upper Tamakoshi Hydropower Company and Shivam Cement had also affected share transactions. Shivam Cement has received permission from the Securities Board of Nepal to launch its IPO. Upper Tamakoshi is preparing to issue 25 percent of its shares to project affected locals and the general public.

Stockbrokers expect the market to stabilise in the next few weeks. According to them, investors might get some relief from a fall in interest rates with the liquidity position of banks improving as the end of the fiscal year approaches.