Market Crash is defined as unbelievably continuous fall in the share prices. In Nepalese perspective, the continuous fall in NEPSE Index triggered by the fall in most companies’ share price has given signals to people that NEPSE is going to crash. Still some argue that NEPSE is in corrective mood.

But the ground reality is neither security market is going to crash nor NEPSE will fall in long-term. It will certainly be rallying to 1000 again. The continuous decline in NEPSE is due to the pressure of ‘sell order’. Because of the high supply of shares compared to demand, price is declining and this is a natural phenomenon. So here are those events that are leading to high supply of shares in the market.

1. Due to the restriction on margin lending by NRB (Nepal Rastra Bank), big investors have to sell their existing shares to apply for attractive IPOs (Initial Public Offering).

2. Five commercial banks have to issue IPOs by Chaitra 2064 as per direction of NRB. These IPOs will not be auctioned and will be available at Rs 100 per share as per NRB decision. Many investors are collecting money to invest in these attractive IPOs.

3. Nepal Telecom is issuing 7,500,000 shares at minimum price of 600 each which will attract minimum of Rs 450 billion. That’s one heck of an attractive IPO and investors are being ready to invest in this IPO even by selling their existing shares.

4. Development Credit Bank and Nepal Merchant Banking & Finance have announced 1:3 and 1:4 right shares respectively. Hence existing shareholders are selling other companies’ share to manage the fund for this purpose.

5. Some finance companies are targeting to become development banks by increasing their capital through right shares and bonus shares. Some commercial banks are also issuing right shares to meet the capital requirement.

Hence, due to above mentioned market situation, more and more money is needed to the investors. In this scenario it is obvious to have an increase in the sell order in market and also it is justifiable that the index is declining.

So as an investor don’t sell your shares expecting that market will crash or share price will fall. Yes share price will further decline but it will not be so for a long time. Nepal Telecom’s share may not be heavily oversubscribed but those five banks’ (as mentioned in point 2) will certainly be heavily oversubscribed. After the allotment of these shares, oversubscribed money will come back to the security market instigating the buy order which will lead to high demand of shares increasing the share price.

So it is time to buy the shares or if you already have enough shares, it is time to hold. Your strategy should be buy and hold. Just wait and watch and be BULLISH.