Kathmandu. Many expected the stock market to gain momentum after the announced budget. Many expected the market to increase because the budget followed a market-friendly policy. The budget included issues such as keeping the capital gains tax on share transactions as it is, making a commitment to make easy arrangements for non-resident Nepalis to trade, restructuring the Nepal Stock Exchange (NEPSE), and strengthening the Securities and Exchange Board of Nepal.

In addition, the budget mentioned issues such as opening an asset management company to handle bad loans of banks and financial institutions, making a commitment to trade in the government bond market, and facilitating investment group companies to invest in industry equity, bonds, and other securities.

Despite this, the stock market has declined after the budget. The market that opened on Monday after the budget announcement increased by only 1.60 points, but fell by 35.73 points on Tuesday. Overall, the market has declined by 34.13 points after the budget.

Before the budget, the National Bank of Nepal (NBN) reduced the risk weight on all types of equity loans to 100 percent during the third quarter review of monetary policy. According to relevant experts, the main reason why the market has not been able to gain momentum despite the favorable policy arrangements is that investors are skeptical about the provisions in the bill to amend the Bank and Financial Institutions Act.

Former President of the Stock Brokers Association of Nepal's Bharat Ranabhat said that the issue of separating the founders and businessmen of banks included in the bill has affected the market. The bill is currently under discussion in the Finance Committee.

The dividend received by founder shareholders and ordinary shareholders is the same. Ranabhat says that investors are afraid that if the founder shares themselves become volatile tomorrow, the attraction towards ordinary shares may decrease. He says that the issue of separating the founder shareholders and businessmen of banks can cause trouble for the economy itself.

The founders are demanding that the basis for selling the founder shares be made while separating the businessmen and the founder shareholders of banks. NRB Governor Bishwanath Paudel has also been emphasizing the need to provide an option for selling promoter shares.

Businessmen say that there may be an option to convert promoter shares into ordinary shares and sell them in the market. If such a situation arises, the supply in the market will increase, putting pressure on prices. This is also the reason for the turmoil in the banking sector, says Prakash Rajouri, President of the Nepal Securities Investors Association.

Opposition parties are currently obstructing the parliament, demanding the resignation of the Home Minister and an investigation into him. However, after Prime Minister KP Sharma Oli took a stand that he would not resign under any circumstances, the political circle has heated up. As a result, the market could not catch up even though the budget adopted a favorable policy.

There is a growing fear that the impasse in parliament may be prolonged. Similarly, as the fiscal year is about to end, some institutions are in a position to book profits by selling shares. Since the overall market has grown well in the past two weeks, it is estimated that profits have also been booked at this time.

The banking sector has grown the most by 9 percent in the past two weeks. Therefore, when the market fell, this sector also fell the most, 2.34 percent, on Tuesday. Since the banking sector is the most powerful, this sector has the most impact on the overall market. Investors say that the profit booking in this sector has brought down the overall market.