NEPSE Drops Over 50 Points Amid Market Manipulation Scandal, Investors Shift to ‘Wait and Watch’ Mode

Kathmandu — Nepal’s stock market remained under sustained pressure throughout the past week, closing significantly lower as investor confidence weakened amid a wave of negative developments. Despite earlier expectations of a rebound, the Nepal Stock Exchange (NEPSE) index fell by more than 50 points over five consecutive trading sessions, signaling a fragile market environment. Alongside the index decline, a noticeable contraction in trading volume suggests that market participation has slowed, with investors stepping back from active buying.

The downturn has been largely attributed to a high-profile market manipulation case involving controversial businessman Deepak Bhatt and companies linked to him. Investigations by the Department of Money Laundering Investigation and the Central Investigation Bureau have reportedly revealed coordinated efforts to artificially inflate share prices in sectors such as insurance, reinsurance, and hydropower. These findings have raised serious concerns about market integrity and transparency, triggering a sharp decline in investor sentiment.

Further intensifying the situation are allegations of possible collusion with regulatory bodies, which have deepened mistrust among market participants. Retail investors, in particular, appear increasingly cautious, shifting into a “wait and watch” stance. This behavioral shift has reduced buying pressure across the market, contributing to declining liquidity and amplifying the downward movement of the index.

At the same time, ongoing crackdowns on business figures linked to financial irregularities have added another layer of uncertainty. While such actions indicate a move toward stricter governance and improved transparency, they have created short-term instability in the market. Investors remain uncertain about the broader implications of these investigations and their potential impact on listed companies, leading to hesitation in committing fresh capital.

From a technical standpoint, the market’s pattern of consistent declines suggests a weakening trend, with lower highs and lower lows forming on daily charts. However, the current market dynamics appear to be driven more by psychological factors than technical indicators. Panic selling during trading sessions, combined with weak buying support, indicates that fear and uncertainty are dominating investor behavior.

Looking ahead, the market’s direction in the coming week is expected to depend heavily on regulatory clarity and the outcome of ongoing investigations. A clear and decisive stance from authorities against proven misconduct could gradually restore confidence and stabilize the market. Conversely, if additional irregularities emerge or uncertainty persists, NEPSE may continue to experience volatility and downward pressure.

Overall, the current situation represents a critical phase for Nepal’s capital market. While short-term challenges are evident, the long-term outlook will largely depend on how effectively governance issues are addressed. Until greater clarity emerges, the market is likely to remain fragile and sentiment-driven, with investors continuing to adopt a cautious approach.