When there is no cash in the market, where to invest in the stock market?
The main reason for the decline in the market is the increase in interest rates by all banks with effect from September 20. Now, instead of withdrawing money from the stock market, the mentality of depositing in the term account even for three months and looking at the market for some time has also increased. Technical analysis based on the Bollinger Bands also shows that the distance between the upper band and the lower band is gradually increasing. This indicates high volatility in the market and indicates that investors have been in a "wait and see" mode for some time.
Technically, short-term investors are likely to dominate the market at any time as the Nepse index has declined by more than 250 points in the last five days. If this happens and short-term investors hold on to the assumption that they will invest in a declining market, the market is likely to stagnate. Technical analysts say that the current correction is likely to end with the market reaching around 2600 points. Therefore, the market is likely to pick up again soon if investors can stop the exit from the market in a panic. However, many have said that the market will remain around the 25 hundred point for some time.
The activities of small investors who have invested in the market are now beginning to affect Nepal's stock market. They have started preparing for the upcoming festivals of Dashain and Tihar. It is seen that the share price has decreased in the market even while such small investors are withdrawing money from the market. Thus, such a big decline seems to have come due to the small investors who are in the process of panicking due to the internal reasons of the market.
Looking at other basic aspects of market decline, the government has not been able to achieve perfection. Due to which, there is a situation where stability has not been achieved.
Even if the budget is passed, there are no signs of money coming into the market right now. Banks are facing an acute liquidity crisis. Banks that opened on Monday after a two-day public holiday have run a permanent facility of Rs 11.44 billion at a time. Not only that, banks have raised Rs 1.17 billion overnight repo to facilitate their business. On the other hand, the interbank loan interest rate has reached 4.98 percent on Monday.