Why is the market declining, what is the main reason for the market to decline?

    Kathmandu | All analysts and investors have their own opinions. Fluctuating share market price is its principle. As we have been studying economics, there is no satisfactory answer as to why and how the share price fluctuated. Pricing is done according to the principle of supply and demand. Similarly, demand and supply in the stock market fluctuate according to the rules.

    Every day, we hear online, radio, television, various newspapers, directly or indirectly, reading the news of the stock market through various means of communication and technology. We have been hearing that the market has increased by so many points today, it has decreased by so many points.

    Share price is not to be determined or fixed by any one person, any group or the officials of the company concerned. In this way, there is no question that any law should be made with the same value by making rules and regulations. The market itself determines the price. Thus, according to the demand of economics and the principle of supply, the demand for the goods we consume is increasing. But as the supply decreases, so does the price.

    The change in interest rates of banks and financial institutions plays an important role in the fluctuation of share market price. When the bank interest rate goes up, the share price starts going down. Investors are more attracted to interest on bank savings than investing in stocks. When interest rates fall, share prices rise. Better a poor horse than no horse at all.

    Similarly, if the demand decreases but the supply increases, the price decreases. Similarly, the number of investors buying shares of a company has been increasing in the stock market. But if sales are low, the company’s share price is likely to rise. Another condition is that if you sell more and buy less, the price goes down.

    Sometimes this happens in the stock market. When buying companies that are not in high demand, the seller is forced to sell even after reducing the price due to lack of buyers. As a result, there is an imbalance between the share buying and selling transactions that take place every day, every time, and the share price fluctuates.

    Another important thing to keep in mind is that companies with the potential to be more profitable in the future, financially based, Companies that have been able to secure their investments as their financial statements have been strengthened are increasing their earnings per share with less bad debts Even when the economy of a country with good returns on bonuses and cash dividends fluctuates every year, the demand per share increases and the supply decreases as the price of the company remains the choice of the buyers. Who do

    Similarly, in the opposite case, if the situation of declining prices is reversed, the non-profit report will show a decrease in profits and bad debts will increase. The company’s weak management, declining earnings per share, declining bonus and cash dividends, When the economic indicators of the economy weaken, the direct effect is that the company loses and the company has to close down, which reduces the demand for shares of the company. The share price of that company is likely to decrease by the same amount. The number of investors who want to invest in such a company is low.

    As the demand decreases, it takes a long time to sell the shares.

    Similarly, another important factor that can make a company’s share price fluctuate is its future plans. Although the company has made lower profits this year, the areas in which the company has invested in the future are likely to be more profitable than in the past. And, shareholders are more likely to receive good bonuses and cash dividends.

    Another important point is that companies that have made good progress in the past will not give the same returns in the future. For example, about 7 years ago today,

    Positive and negative news about the stock market, which transmits the news from time to time on the other factors that cause fluctuations in the share price, also causes fluctuations in the share price.

    Other factors affecting the share price include profit and loss of the company, dividends distributed by the company, political changes, employment situation in the country, economy, future strategic objective of the company, legal changes,

    Another factor is the change in interest rates of banks and financial institutions. When the bank interest rate goes up, the share price starts going down. Investors should invest in stocks

    Another important factor in the fluctuation of share market price is monetary policy. Monetary policy is issued by the National Bank. Susan to the banks and financial institutions to make the economy of the whole country strong and transparent

    Due to that, the share price has a direct effect on fluctuations. Just like in 2072 BS, NRB in its monetary policy said that every bank and financial institution should increase its paid up capital. All banks and financial institutions increased their capital through bonuses, rights shares, and merger acquisitions. Nepal’s stock market made a history when the same capital increase came in monetary policy. All the companies have increased their share price. Directly and indirectly, the monetary policy of the country also reduces the share market price.

    Other factors affecting the share price include profit and loss of the company, dividends distributed by the company, political changes, employment situation in the country, economy, future strategic objective of the company, legal changes,

    Amid political instability, a contraction of liquidity, limited access to easy credit, and the proliferation of sanctions, it is unlikely that this will be sustainable, given the high risk of shrinking the company’s revenue.

    Why is the market behavior different?
    As the epidemic spreads, the demand for loans for investment in other sectors will decrease, so why most of the investors will return to the stock market and the market growth will not be correct? Because they only look at past trends.
    However, the market does not always show the same trend. The market would be risk-free if investors showed the same trend and investors would benefit from the investment This time too, the market has shown a different trend. Last year, investors were fed up with the then finance minister’s intolerant attitude towards the market. And, as soon as the finance minister leaves the post, the market goes up
    The market had fallen to a record low last year. And, the declining market was expected to rise. The liquidity situation was very comfortable. Banks and financial institutions had ample limits for share loans. Politics did not become unstable. Now there is another change in all these. And, investors need to understand that.

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