Nepal’s Stock Market Expands Rapidly as New Securities Worth Rs. 132 Billion Enter NEPSE

Nepal’s capital market witnessed a sharp expansion during the first nine months of the current fiscal year, with new securities worth more than Rs. 132 billion listed on the Nepal Stock Exchange. The latest figures published by Nepal Rastra Bank show that Nepal’s securities market is not only growing in size, but also becoming increasingly active despite ongoing economic uncertainty in the broader economy.

According to the data, securities worth Rs. 132.36 billion were listed during the review period, including ordinary shares, bonus shares, rights shares, mutual funds, debentures, and follow-on public offerings (FPOs). Among them, ordinary shares alone accounted for Rs. 45.54 billion, while bonus shares contributed nearly Rs. 39.89 billion. Mutual funds added another Rs. 27.50 billion to the market, indicating that institutional investment products are gradually gaining stronger presence in Nepal’s financial system.

The rapid rise in listings reflects an important shift in Nepal’s financial landscape. At a time when bank credit growth remains weak and private-sector investment has slowed, the stock market appears to be emerging as an alternative channel for capital mobilization. Analysts say companies are increasingly turning toward equity financing as borrowing costs, banking pressure, and liquidity imbalances continue affecting traditional financing systems.

Another notable trend is the continued dominance of the hydropower sector in Nepal’s stock market. Out of 294 listed companies as of mid-April 2025, as many as 103 belong to the hydropower sector. This makes hydropower the second-largest sector by number of listed companies after banks and insurance institutions. Economists say this reflects Nepal’s long-term policy focus on energy development and the growing attraction of hydropower projects among retail investors.

However, the data also reveal a deeper structural imbalance in Nepal’s capital market. Although hydropower companies dominate by number, banks, financial institutions, and insurance companies still control more than half of the market structure, accounting for 50.2 percent of total market share. This suggests Nepal’s stock market remains heavily concentrated around the financial sector, limiting broader diversification into manufacturing, technology, export industries, and productive enterprises.

The increase in public offering approvals also signals rising fundraising activity. During the review period, securities worth Rs. 41.53 billion received approval for public issuance. Mutual funds alone accounted for more than Rs. 27 billion of approved securities, significantly larger than approvals for ordinary shares and debentures. This indicates that fund-based investment products are expanding faster than many traditional corporate listings.

Market indicators also showed improvement during the period. The NEPSE index climbed from 2662.09 points in Chaitra 2081 to 2833.60 points by Chaitra 2082. Although the rise was not extremely sharp, the upward movement suggests that investor confidence gradually improved despite concerns surrounding weak economic growth, rising bad loans in banks, and sluggish business expansion.

At the same time, total market capitalization increased from Rs. 44.25 trillion to Rs. 48.38 trillion within one year. More importantly, the ratio of market capitalization to Gross Domestic Product (GDP) rose from 71.38 percent to 73.23 percent. Analysts interpret this as a sign that Nepal’s stock market is becoming increasingly influential within the national economy.

Still, experts caution that rapid market expansion alone does not necessarily indicate stronger economic fundamentals. A large portion of trading activity in Nepal remains driven by retail speculation, hydropower enthusiasm, and liquidity cycles rather than long-term industrial productivity. Concerns also remain over limited diversification, low institutional depth, and the weak connection between stock market growth and real-sector industrial expansion.

The latest figures nevertheless highlight one important reality: Nepal’s capital market is gradually evolving from a relatively small financial platform into a much larger economic force. As more companies seek public financing and investor participation expands, the role of the stock market in shaping Nepal’s broader economic direction is likely to grow even further in the coming years.