The Nepal Stock Exchange (NEPSE) launched the fully automated electronic trading system of shares in the secondary market on July 17, the first day of the new fiscal. Traders, brokers and stakeholders of NEPSE were all agog. On July 3, NEPSE had tested the requi­site software, which would allow inves­tors to post purchase and sales order and provide them online payment, clearing and settlement facilities. The NEPSE Online Trading System (NOTS) had been purchased from YCO Pvt Ltd for Rs 6.4 million and the system was successfully tested by an Indian company, a third party. So far so good.

 

But when the NOTS came into oper­ation on July 17, few seemed satisfied because it had failed to stem the long bearish trend. This was against the expectation that the new system would increase the number of market partici­pants and also ease trading of existing market players, thereby boosting the market. It wasn’t meant to be. NEPSE slumped to 1,193.39 from 1,200.09 during the trading week of July 15-19.

 

Although the market indices saw a 12.27 increase on the first working day of the trading week on July 16, the second day saw a decline in the indices by 8.05 points. Then, on July 18, trading was disrupted for two hours due to techni­cal problems at the NEPSE data center and fiber connections, limiting trading to Rs175.37 million, while the NEPSE plunged by 5.54 points.

 

In fact, the bearish trend in NEPSE had been evident all through the previous fiscal. During the mid-July 2017 to mid-July 2018 period, investors lost Rs 421.69 billion. The share market swooned due to oversupply supply of shares and fall in demand caused by political uncertainty.

 

The sour investor mood is also reflected in market capitalization. On the last day of the fiscal 2016-17, the market capitalization of traded shares stood at Rs 1,856.82 billion, according to NEPSE. On July 16, the last day of the fiscal 2017-18, the market value of listed shares had decreased to Rs 1,435.13 billion. In the one year, the NEPSE index plunged by 370.13 points, to close at 1,212.36 points on July 16.