NEPSE Surges Above 2800, Strong Momentum Backed by Fundamentals and Technicals

The Nepal Stock Exchange (NEPSE) continued its upward rally on Wednesday as listed companies began publishing their annual financial reports. With dividend expectations rising, investors have driven the market up for three straight sessions. On Wednesday alone, the NEPSE index surged by 53.01 points to close at 2819.10, crossing the 2800 level for the first time in 11 trading days.

Trading Volume Jumps

Market turnover also recorded a significant increase. Compared to Tuesday’s NPR 4.18 billion, Wednesday’s trading soared to NPR 7.68 billion. All 13 sectoral indices closed in green, with the Development Bank sub-index gaining the most at 3.40 percent.

Dividend Expectations Drive Sentiment

Most companies have reported improved profitability, strengthening their dividend distribution capacity. Several mutual funds have already declared last year’s returns. Strong recovery in commercial banks has further boosted profit margins and dividend potential, while microfinance companies also presented improved financial statements.

Recently, Nepal Rastra Bank (NRB) issued a directive allowing microfinance institutions to distribute up to 25 percent dividends based on capital adequacy and non-performing loan ratios. This removed uncertainty surrounding microfinance dividends, bringing investors back into the market.

Hydropower companies have also posted stronger profits due to low interest rates. On the regulatory side, confusion caused by the plan to issue separate ISIN numbers for promoter and ordinary shares was eased after the Securities Board of Nepal (SEBON) stepped in to resolve the matter.

Policy Support and Liquidity

Both fiscal and monetary policies remain market-friendly. NRB has increased the ceiling on share-backed lending and reduced risk weight, encouraging banks to expand credit against shares. Last year alone, banks and financial institutions disbursed over NPR 50 billion in margin lending, a figure expected to rise further this year.

Meanwhile, excess liquidity has persisted in the financial system for nearly 18 months. To manage it, NRB has been regularly mopping up funds twice a week through deposit collection auctions. Banks are actively seeking borrowers, a sign that liquidity conditions remain supportive for capital markets.

Major Movers

On Wednesday, Vikas Hydropower once again hit the positive circuit level, while Samata Microfinance jumped nearly 9 percent and Green Ventures gained more than 8 percent. On the downside, the KBL Debenture 2086 fell the most, dropping 5.79 percent.

In terms of trading volume, Himalayan Reinsurance topped the chart with transactions worth over NPR 650 million. Nepal Reinsurance followed with NPR 550 million, and Green Ventures recorded more than NPR 460 million.

Technical Analysis: Strong Breakout Above Key Levels

Technical analyst Ajit Khanal highlighted that the market broke above the high of Tuesday’s Inverted Hammer candle, forming a strong Bullish Marubozu candle. NEPSE closed above three key resistance levels simultaneously—50-day Moving Average (50MA), 50% Fibonacci retracement, and the middle Bollinger Band. Analysts believe this breakout opens the door for further upside momentum.

Khanal added that the “One Candle Buy” signal from the previous session was respected by the market, reinforcing bullish sentiment.

Broker Analysis: Big Players Back in Action

An analysis of the top 10 brokers showed that 6 brokers recorded higher buy-side trades compared to 4 brokers with higher sell activity. Major brokers such as 58, 45, 42, 48, 35, and 38 were net buyers, while brokers 34, 49, 44, and 57 were net sellers.

From Broker 58 alone, investors purchased:

• GVL (Green Ventures): 557,000 shares at an average price of NPR 570

• HPPL (Himal Power): 117,000 shares

• LEC (Liberty Energy): 104,000 shares

On the sell side, Broker 58 recorded 637,000 shares of GVL sold.

Interestingly, Nepse Trading’s AI Traffic Light System had already flashed a green signal the day before, hinting at the bullish breakout.