Despite high liquidity in the banking system and falling interest rates, the Nepali stock market continues to decline. This downward trend comes at a time when key regulatory bodies, including the Securities Board of Nepal (SEBON) and the Nepal Stock Exchange (NEPSE), are currently without leadership. Chandra Singh Saud, the former CEO of NEPSE, notes that the market is moving contrary to expectations due to two primary factors: the psychological fear triggered by government investigations into large-scale investors and the ongoing leadership vacuum in regulatory institutions.
Saud emphasizes that the absence of heads at SEBON and NEPSE has stalled the implementation of modern financial tools such as intraday trading, short selling, and financial derivatives like the NEPSE 30. He also criticizes the recent decision to increase the circuit breaker limit from 10% to 15%, calling it a premature move that may have encouraged panic selling. Furthermore, concerns have been raised regarding the 'book building' process, where large corporate houses are allegedly engaging in cartelling to manipulate share prices. To fix this, Saud suggests that only one company per corporate group should be allowed to participate in the price discovery process.
While small investors are currently facing significant pressure from margin calls and a shrinking portfolio, experts believe the situation is temporary. With the upcoming national budget and the year-end dividend season approaching, the market is expected to find its rhythm again. However, Saud stresses that for long-term stability, the government must ensure regulatory autonomy and invest in robust IT infrastructure to monitor market manipulation in real-time.
