The stock market, which was closed for the previous 6 days (Falgun 20-24) due to the House of Representatives elections, jumped 162.93 points on Monday. Monday is the first trading day after the elections. This is the most in the last four and a half years that the NEPSE has increased by so many points in a single day. Earlier, on 21 Bhadra 2078, the NEPSE had increased by 161.94 points in a single day. Since then, on 5 Asoj 2082, the NEPSE had increased by 111 points in a single day. 

After the market had risen by a high number since it opened on Monday, three circuit breakers had to be triggered, and share trading had to be suspended. On this day, the NEPSE rose by 108 points (four percent) in the first minute of the market opening, causing the first circuit breaker. The market opened 20 minutes later. The NEPSE rose by 5 percent in the first minute of the market opening, causing the second circuit breaker. After that, trading was halted for 40 minutes. 

After that, the NEPSE rose by 6 percent within another minute of the market opening. Then, trading was stopped for the day through the third circuit breaker. At that time, the NEPSE rose by 162.93 points, taking the overall NEPSE to 2,875.43 points. Share trading was limited to three to four minutes on Monday due to the three circuit breakers. Shares worth Rs 555.9 million were traded during that period. Experts have analyzed Monday's increase as investors' confidence in the stock market increased after the election and a stable government came to power. 

A circuit breaker is a tool used to control abnormal fluctuations in the stock market. A system in which the trading of securities is suspended for a certain period of time when there is an unexpected change in the market price of securities traded in the secondary market (the market price increases or decreases). According to the current system, if the NEPSE index increases/decreases by 4 percent in the first hour of the start of share trading every day, trading is suspended for 20 minutes through the first circuit breaker.

After the suspended trading reopens, if the index decreases/increases by 5 percent, trading is suspended for another 40 minutes. After that, if the market opens and decreases/increases by 6 percent, there is a provision to suspend trading for the rest of the day. According to this provision, NEPSE closed Monday's trading through a circuit breaker. However, there has been a discussion that the current arrangement regarding this circuit breaker should be revised. Various studies conducted recently for capital market reform have also suggested making the existing arrangement of circuit breakers relevant to the time. 

'On the last day before the election (19 Falgun), NEPSE had risen by 38 and a half points. Investors had shown confidence in this, saying that the election would be held on time despite the uncertainty, to increase investment,' said Narendra Sijapati, former president of the Stock Brokers Association. 'As the election results showed that the Rashtriya Swayamsevak Sangh (RSS) would form a single and stable government, investors wanted to invest more.' 

Currently, the policy is mostly favorable for the stock market. If there is more liquidity in the financial system, interest rates are low. However, the stock market was looking for a big positive message. Investors received that positive message after the election results indicated that a stable government would be formed, which is why the stock market rose sharply on Monday, says Sijapati. ‘The market rose on Monday due to the certainty of a stable government. The stock market may rise for a few days as it comes amid normal currency fluctuations,’ he added, ‘The pace of NEPSE will be determined based on the policy the government makes for the growth of NEPSE in the long term, and the efforts it makes for reforms.’ 

Sagar Dhakal, President of the Stock Brokers Association, said that the market has seen an increase as the initial election results have raised hopes among investors. "We have studied the manifestos of many political parties in this election, among which the Rashtriya Swayamsevak Sangh (RSS) has included many agendas for capital market reform in its manifesto," he said. "If those agendas are implemented, the Nepali capital market will reach much higher levels." Rabin Kandel, general secretary of the Stock Investors Association, says that even though the market has increased since the election brought a positive atmosphere, it cannot be called high growth.

"The market has had a positive impact after the new government comes to power after the election. But the turnover of Rs 550 million cannot be called high growth," he said. "This was increased through manipulation. Because the government has not been formed, the basic problems of the stock market have not improved. Therefore, there is no reason for the stock to increase except for a positive message." The RSS has stated in its manifesto that it will strengthen regulatory reforms, technology-friendly transaction systems, and investor protection mechanisms to make the capital market transparent, secure, and investment-friendly. 

‘We will restructure the Securities Board by making necessary amendments to the Securities Act, 2063, providing it with sufficient manpower, enhancing its efficiency and providing it with the necessary autonomy, restructuring the Nepal Stock Exchange (NEPSE) and CDS and Clearing Limited to increase private sector share participation, and developing competitive depository services,’ the pledge states. ‘We will make NEPSE an international standard by increasing the liquidity, transparency and risk management capacity of the capital market, and by gradually introducing intraday trading, short selling and derivative financial instruments including futures, options and others with a clear legal structure and strict regulation.’