NEPSE In correction Phase : Now it can be bounce back trend will change gradually

Aug Sun 2022 04:31:57

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NEPSE In  correction Phase :  Now it can be bounce back trend will change gradually

KATHMANDU: There has been a big correction in NEPSE on Sunday. The market has been gradually declining for the past few days. On this day, the NEPSE index decreased by 33.36 points and stuck at 1989.26 points. As the index slows down, the transaction amount is also affected. However, more than 2 billion rupees were traded on Sunday. As the dividend season is about to begin, the market is not showing a positive mood. There are several contributing factors to the market decline.

But the main and most powerful reason is lack of liquidity and high interest rates. The financial system still lacks sufficient investable funds. The interest rate has become more expensive than the deposit side is weak. Demand for loans in banks and financial institutions is high. The interest rate has also increased due to the lack of coordination between the demand and supply sides. Its direct and direct impact is falling on the capital market. But this cycle of liquidity shortages has been around for a long time.

 Based on this, it can be assumed that the trend will gradually change. Some preliminary signs of this have already started to appear. The interest rate has reached a very high point and the government is banning imports. Real estate business is also slow. There is an attractive interest rate on deposits. Remittances have started to increase. It is about a year and a half since the cycle of lack of liquidity started. Based on these facts, it has been analyzed that the depositors will be attracted to the bank again and after some time the liquidity will be eased.

 Investors' morale also weakens in a falling market. Common investors follow the crowd. When it falls, there is fear that it will go down further, that's why many people don't buy shares at this time. But because the psychology works that when it is high, it will go higher, so a large crowd tends to buy. But analysts say this trend is wrong. They are of the opinion that if they adopt the strategy of buying when it is low and selling when it is high, they can get enough profit.

 However, the positive aspects are gradually dominating the market. The indicators of the economy have started to become positive. The share price is cheap. The season of dividends has arrived. The election is approaching. The Bearis Cycle is also nearing completion. The number of investors is increasing. Policy makers are also becoming positive. Looking at the longer path of the market in these scenarios, it is seen to be bullish and positive. Analysts say that in the short term, moving forward through normal correction is not acceptable.