Kathmandu-The recent developments in the money laundering investigation have caused widespread turbulence in the stock market, which has been on a continuous decline. The Nepal Stock Exchange (NEPSE) index has fallen steadily, weakening investor morale.

After rising post-election, the stock market has come under pressure due to the money laundering probe, showing a consistent downward trend. On Sunday, the market fell by 105.50 points (3.79 percent ) to close at 2,676.68 points.

On the last trading day before the elections, Falgun 19, the market closed at 2,712.49 points. Investors had expected new highs after the new government formed, but the reality was the opposite.

Following the opening on Falgun 25 after the House of Representatives elections, the market surged by 6 percent to reach 2,875.43 points. However, the volatility since then has turned into a clear decline. In eight trading days since Chaitra 11, NEPSE has fallen by 258.83 points, and in six trading days after the new government’s formation, it has dropped by 282.17 points.

Trading volumes have increased significantly. On Thursday, turnover was Rs 8.81 billion, while on Sunday it exceeded Rs 12.38 billion, indicating high market activity.

Market analysts and brokers attribute the recent decline to events linked to the money laundering investigation. The arrest of businessman Deepak Bhatt has created psychological pressure, as other investors and businessmen connected to him could also face investigation.

Investors are cautious, particularly those with large investments, due to uncertainty over the government’s next steps. The involvement of listed companies in the investigation has raised questions about governance and transparency.

Brokers note that the disclosure of payments through listed institutions for opaque financial transactions has shaken investor confidence, weakening overall market sentiment.

Preliminary investigations show that Bhatt, arrested on Friday, used funds from sources other than his own accounts to purchase shares in various companies. For instance, funds were used through Nepal Reinsurance Company and other institutions for share purchases.

The investigation found that Himalayan Reinsurance contributed Rs 2.73 billion, its subsidiary Himalayan Securities Rs 221.9 million, Nepal Microinsurance Rs 161.7 million, the subsidiary of Nepal Life Insurance Rs 370 million, and HLI Large Cap Fund Rs 251.4 million, totaling Rs 3.81 billion.

How the investigation proceeds will determine the future direction of the stock market. For now, uncertainty and psychological pressure suggest the market is likely to continue its downward trajectory.