Sharp Decline in Share Transaction Amount in One Month

December 20: In the recent days, the transaction amount of shares in the secondary market has dropped drastically. The transaction amount which was nearly of Rs 1 billion till one month back has declined by 40-60 per cent at present. In compare to transaction amount of the first trading day of the week, Monday saw decline of Rs 60 million transaction amount to Rs 561.6 million. Presently, the market is facing liquidity scarcity due to the decline in growth  of deposit compare to loan extension by the banks and financial institutions (BFIs) resulting contraction of  share transactions. The BFIs are providing 7-10 per cent interest rate on deposit to increase their deposit collection. Investors get attracted to increased interest rate on deposit when the share market is down turning which has also affected the share market.

Meanwhile, the BFIs have increased the interest rate on margin lending. The investors who seek loans to invest in share market have been disappointed on increased interest rate on margin lending. In the down falling stock market, share investors do not get ideal return from borrowed money, thus, the transaction amount has decreased significantly in the share market," said an analyst. According to him, the market is at 'wait and see' condition.

Although Nepal Rastra Bank has published a report stating that all the economic indicators of the nation is positive, it has not affected the share market. Moreover, the attractive dividend announcement and right share issuance from the BFIs has not been able to attract the investors.