NEPSE Snaps Four-Day Losing Streak on Friday, but Technical Picture Stays Murky

KATHMANDU — Nepal's stock market finally found its footing on Friday after enduring one of its more painful weeks in recent memory. The NEPSE index, which had quietly bled away more than 62 points across four straight sessions, closed higher by nearly 13 points — a recovery that felt less like a turning of the tide and more like exhausted sellers stepping aside long enough for bargain hunters to move in.

The benchmark index settled at 2,685.54, up 12.96 points or 0.48 percent from Thursday's close. The gain, while modest in absolute terms, carried symbolic weight given the severity of what preceded it. Monday alone had wiped out 33.28 points — the heaviest single-day loss of the week — followed by declines of 4.64 points on Tuesday, 7.79 points on Wednesday, and 16.29 points on Thursday. Taken together, the four-day slide represented a meaningful erosion of investor wealth and, more importantly, of market confidence.

What changed on Friday was not the underlying sentiment so much as the level. When prices fall far enough, short-term traders who had been watching from the sidelines tend to return, and that is precisely what happened. The buying was not driven by any fresh positive catalyst — no policy announcement, no earnings surprise, no external trigger — but rather by the simple arithmetic of valuation: stocks had become cheap enough relative to recent levels to attract opportunistic interest.

Turnover data supported the cautious optimism. Trading volume reached Rs 3.75 billion on Friday, with 8.85 million units of shares changing hands across 46,755 transactions. While these numbers are not exceptional by historical standards, they represented a clear improvement over the tepid activity of the preceding days, when falling prices had been accompanied by shrinking participation — a combination that typically signals weak conviction on both sides of the market.

The breadth of Friday's recovery was notably broad. Of the 275 companies that traded, 180 posted gains against just 82 that declined, with 13 ending flat. That advance-to-decline ratio of roughly 2.2-to-1 is the kind of number that suggests the buying was reasonably well distributed rather than concentrated in a handful of large-cap names. Among the 13 sub-indices, 11 ended in positive territory. Only non-life insurance and the trading sector bucked the trend, finishing in the red — a detail worth noting given that non-life insurance had shown signs of relative weakness through much of the week.

The day's standout performer was Everest Color Limited, whose shares surged Rs 170.70 or 14.99 percent to close at Rs 1,309.30, stopping just short of the upper circuit limit. The move was dramatic but came without any publicly disclosed fundamental trigger, which itself raises questions about what was driving it. Behind Everest Color, Laxmi Value Fund-2 rose 8 percent, Joshi Hydropower Development Company climbed 6.79 percent, NIBL Growth Fund advanced 6.67 percent, and Universal Hydropower Company gained 6.44 percent. The concentration of gains in the hydropower and mutual fund segments is worth paying attention to — both sectors have historically attracted retail investors looking for relatively lower-priced entry points during market corrections.

On the turnover front, Ridi Power Company dominated with transactions exceeding Rs 172.6 million, a figure that stands out given the company's size and suggests concentrated institutional or retail interest. Global IME Bank followed with Rs 153.2 million, then Central Finance at Rs 148.3 million, Reliance Spinning Mills at Rs 116 million, and Corporate Development Bank at Rs 108.7 million. The presence of two banking names in the top five by turnover is consistent with the broader observation that banks were the primary engine driving Friday's session — a pattern that analysts noted but approached with some caution, given reports of significant promoter share transactions in the banking sector during the day. When promoter-level activity inflates turnover figures, the resulting volume can be misleading as a gauge of genuine retail or institutional interest.

On the losing side, Bottlers Nepal (Terai) fell the hardest, dropping 5.33 percent — a decline that stood out in an otherwise broadly positive session and may reflect company-specific concerns rather than any sectoral trend.

What the Technical Picture Is Actually Saying

Strip away the day's gains and look at the charts, and a more complicated story emerges. Friday's recovery, while welcome, did not resolve the key technical questions that have been building over the past several weeks. If anything, it may have simply deferred them.

The most telling development of Friday's intraday session was the market's repeated failure to break above its 200-day Moving Average. The index tested this level twice during the session — a level that technical analysts treat as one of the most significant long-term trend indicators available — and was rejected both times, ultimately closing below it. That is not a neutral outcome. In technical analysis, when a market tests a major resistance level multiple times and cannot break through, it typically strengthens that resistance rather than weakening it. Each failed attempt adds to the body of evidence that sellers are positioned at that level and are willing to defend it.

Technical analyst Ajit Khanal put it plainly: until NEPSE manages to close above the 200 MA and sustain that position across multiple sessions, the technical outlook remains negative regardless of any single day's performance. A confirmed breakout above this level would require not just a brief intraday pierce but a closing price above it — ideally followed by that level converting from resistance into support. None of that happened on Friday.

The ADX indicator adds another layer of concern. ADX, or Average Directional Index, measures the strength of a trend rather than its direction — a rising ADX in a downtrend means the downtrend is strengthening, while a falling ADX suggests momentum is fading. In the current environment, ADX remains in a downtrend, which on its own might be read as suggesting the selling pressure is losing force. However, this reading must be combined with the broader context: the market has failed to form a Higher High for five consecutive candles. That pattern — lower highs stacking up without any upward breakout — is the textbook definition of a market that has not yet made up its mind to change direction. Falling ADX in this context does not signal recovery; it signals drift without conviction.

The intraday price action told an interesting structural story. The market opened with a gap-down, suggesting that overnight sentiment remained negative heading into the session. The day's low was struck at 11:37 AM, after which buyers gradually asserted themselves, pushing the index to its intraday high at 2:05 PM before a modest late-session correction brought it off those peaks into the close. That pattern — gap-down open, morning capitulation, afternoon recovery, partial late-day fade — is consistent with short-term technical buying rather than the kind of sustained institutional accumulation that precedes a genuine trend reversal.

Late in the session, heavy activity in NRIC shares introduced an additional element of volatility, contributing to the choppiness seen in the final stretch of trading. This kind of end-of-session turbulence from a single counter can distort the closing price picture and makes it harder to draw clean conclusions from the day's final numbers.

Perhaps the most genuinely encouraging data point of the day came from broker-level analysis. Among the top ten brokers by volume, six were net buyers — meaning they purchased more shares than they sold on balance. In a market recovering from a four-day slide, net buying by a majority of the most active brokers is a meaningful signal. It suggests that at least some of the larger participants in the market saw Friday's lower prices as an opportunity rather than a warning.

Even so, analysts urge caution in over-interpreting any single session's data. The combination of a failed 200 MA breakout, an ADX that has not confirmed any change in trend direction, promoter-driven volume in the banking sector, and five consecutive candles without a Higher High paints a picture of a market that has paused its decline rather than reversed it. The critical test, as the coming week opens, will be whether NEPSE can find the sustained buying interest needed to push decisively above the 200 MA — and hold it. Until that happens, the technical verdict remains the same: the path of least resistance still points downward.

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