NEPSE Falls 33 Points on Profit Booking, Market Tests Key 200-Day Moving Average

Kathmandu — Nepal’s stock market came under significant selling pressure on Monday after a sustained rally in recent sessions, with investors increasingly moving to secure short-term profits. The Nepal Stock Exchange (NEPSE) index dropped 33.28 points, or 1.22 percent, to close at 2,701.32 points on the first trading day of the week.

The decline followed a strong run in which the benchmark had gained more than 160 points over a relatively short period. NEPSE had advanced in eight of the previous nine trading sessions, creating room for short-term investors to book profits. Monday’s fall, therefore, appears to have been driven largely by profit-taking, although the technical structure now places the market at an important point.

The index opened at 2,727.90 points and climbed as high as 2,744.81 during the session. However, the early momentum failed to hold. NEPSE later fell to an intraday low of 2,693.03 before closing at 2,701.32. The movement suggests that buyers were active during the early part of the session, but sellers gradually gained control as trading progressed.

The market reached its intraday high at around 12:13 pm before turning lower. From there, the index continued to form lower levels through the second half of the session. The daily chart also produced a “lower low” structure, indicating that short-term buying momentum has weakened following the recent rally.

From a technical perspective, the most important development is NEPSE’s approach toward its 200-day moving average, currently around the 2,688-point level. The index closed slightly above this widely watched long-term technical indicator, meaning that the support has not yet been decisively broken.

The area between roughly 2,685 and 2,700 points is therefore emerging as an important short-term support zone. If NEPSE manages to remain above this range and fresh buying interest returns, the market could attempt another move towards the 2,730–2,750-point region. A sustained break below the 200-day moving average, particularly with strong turnover, could, however, increase the risk of another round of selling.

Turnover remained relatively strong despite Monday’s decline. Shares worth Rs 6.08 billion changed hands, slightly lower than the more than Rs 6.26 billion recorded in the previous session. The limited decline in turnover suggests that investor participation has not weakened dramatically despite the fall in the benchmark.

A total of 13.92 million shares of 360 companies were traded through 69,803 transactions. The fact that turnover remained above Rs 6 billion while the index declined indicates that both buyers and sellers remained active. However, the nature of intraday trading showed relatively stronger selling pressure.

Trading volume appeared to rise when the market was moving lower, while activity weakened during brief upward moves. Such a pattern generally indicates that sellers were more aggressive than buyers during the session.

Market breadth was also distinctly negative. Share prices of 234 companies declined, while only 36 companies recorded gains and five remained unchanged. The number of declining stocks was more than six times the number of gainers, showing that Monday’s weakness was broad-based rather than being driven by only a few large companies.

Sector-wise, 11 of the 13 sub-indices ended lower. Only the banking and mutual fund sub-indices managed to remain marginally positive.

The manufacturing and processing sub-index recorded the steepest fall, declining 2.30 percent. Hotels and tourism and the trading sub-index also lost more than 2 percent. Development banks, hydropower, life insurance, microfinance, non-life insurance and the “others” group each fell by more than 1 percent.

Banking stocks showed some momentum during the first hour of trading, but the strength was not sustained through the session. Because commercial banks carry significant weight in the broader index, the failure of early banking momentum to expand into the wider market contributed to weaker sentiment during the second half.

Broker-level activity also pointed towards stronger selling pressure. Among the 10 largest brokers by turnover, eight reportedly sold more shares than they purchased during the session. This suggests that active market participants were leaning towards profit booking. Still, a single day of broker-level net selling is not sufficient to determine the longer-term direction of the market.

The Relative Strength Index, or RSI, stood at around 55 on the daily chart. This suggests that the market is neither technically oversold nor excessively overbought. Remaining above the neutral 50 level is still mildly positive, but the recent decline shows that momentum has weakened from the levels seen during the latest rally.

At the individual-company level, Everest Colour Limited was among the strongest performers despite the broader decline. Its share price surged 14.99 percent to Rs 748.70 per share. GS-Y, Sanima Debenture 2085, Gurans Laghubitta and NIMB Debenture also ended higher.

In contrast, Aatmanirbhar Laghubitta Bittiya Sanstha recorded the largest decline of the session, falling 13.38 percent.

Reliance Spinning Mills recorded the highest turnover, with shares worth more than Rs 338.66 million traded. Global IME Bank followed with turnover of around Rs 281.3 million, while Ridi Hydropower recorded Rs 221.3 million. Kumari Bank saw transactions worth about Rs 172.2 million, and Central Finance recorded turnover of approximately Rs 159.9 million.

The broader technical picture shows that NEPSE recently rebounded sharply from around the 2,570-point level and climbed above 2,740 within a relatively short period. Against that background, Monday’s decline could still be interpreted as a normal correction following a strong rebound rather than the beginning of a fresh bearish trend.

The more important question is where that correction finds support.

If the index manages to establish support above its 200-day moving average, the recent recovery could remain technically intact. But if NEPSE breaks clearly below the 2,685–2,700 support zone and remains there, the recent rally could increasingly look like a temporary rebound rather than the beginning of a sustained upward trend.

For now, the market is sitting at a technically sensitive level. Staying above the 200-day moving average remains a positive factor, but the lower-low formation, stronger turnover during declines, broad-based weakness across sectors and increased selling by major brokers all point towards the need for caution.

The next few trading sessions will therefore be crucial. Whether buyers defend the 2,685–2,700 zone or sellers force a decisive break below it is likely to determine whether the latest decline remains a routine correction or develops into a deeper phase of market adjustment.