NEPSE Under Sustained Pressure as Three-Day Decline Signals Weak Sentiment; Key Support Holds Amid Uncertain Outlook

Nepal’s stock market extended its losing streak for the third consecutive trading session, reflecting continued selling pressure and weakening investor confidence. Over the past three trading days, the NEPSE index has dropped by nearly 58 points, indicating that the market has struggled to find upward momentum. The persistent decline suggests that investors remain cautious, with sentiment tilted toward risk aversion rather than fresh accumulation.

On Thursday, the benchmark NEPSE index slipped by 5.73 points to close at 2,738.72. This follows sharper declines of 26.16 points on Tuesday and 25.81 points on Wednesday. The fact that the market ended the final trading day of the week in negative territory reinforces the ongoing downward trend. With Friday being a public holiday, trading will resume only on Monday, extending the period of uncertainty and leaving investors in a wait-and-watch mode.

Broader market indicators also reflected mild weakness. The sensitive index edged down by 0.07 points, while the float index and sensitive float index declined by 0.29 points and 0.01 points respectively. Although these movements appear modest, they collectively signal that the market lacks strong buying momentum and continues to lean toward a negative bias rather than sharp volatility.

Turnover figures further highlight declining participation. The total transaction value fell slightly compared to the previous day, with Thursday recording approximately NPR 4.91 billion in trades across 346 companies through over 80,000 transactions. This is lower than Wednesday’s NPR 4.98 billion turnover, suggesting that market activity has slowed. Reduced liquidity during a declining phase often reflects hesitation among buyers, as investors remain uncertain about near-term direction.

Market breadth clearly favored the downside. While 98 companies registered gains, a significantly higher number—161 companies—closed lower, and 10 remained unchanged. This imbalance underscores the dominance of sellers across most segments of the market. Sector-wise analysis paints a similar picture, with 11 out of 13 sub-indices ending in the red. Only the banking and manufacturing & processing sectors managed to post marginal gains, while the rest faced declines. However, since most sectoral losses remained below 1 percent, the market did not experience a sharp correction, but rather a steady, controlled downtrend.

At the individual stock level, performance remained mixed. Srinagar Agritech Industries emerged as the top gainer with a 12.57 percent increase, whereas Corporate Development Bank suffered the steepest decline of 10.38 percent. In terms of turnover, Reliance Spinning Mills dominated trading activity, followed by Ankhu Khola Hydropower and National Hydropower Company. The concentration of trading in a few stocks indicates selective participation rather than broad-based market confidence.

Despite the ongoing pressure, the absence of a sharp decline suggests that the market is not in panic mode. Instead, investors appear to be adopting a cautious stance, waiting for clearer signals before making significant moves. This “wait and see” approach is often observed when the market approaches critical technical levels or when there is a lack of strong positive triggers.

From a technical perspective, the market has reached a crucial juncture. The NEPSE index has once again reacted near its 200-day moving average and an established trendline support, forming a doji candlestick pattern on Thursday. This formation typically indicates indecision in the market and often precedes a significant move in either direction. Historically, the 200-day moving average has acted as a strong support zone, and the current reaction reinforces its importance.

The Relative Strength Index (RSI) has declined to around the 40 level, which is generally considered a reaction zone rather than an oversold condition. This suggests that while the market has weakened, it still retains the potential to rebound if buying interest emerges. Meanwhile, the Average Directional Index (ADX) has started to trend upward, signaling that the strength of the prevailing trend—whether bullish or bearish—may increase. This creates a critical situation: if the market continues to form lower lows alongside a rising ADX, it could confirm a stronger bearish trend. Conversely, a rebound leading to a higher high could signal the return of bullish momentum.

Intraday trading behavior further reflects this indecision. The market opened with a slight gap-down and hit its day’s low at around 11:21 AM. A mid-session recovery, driven primarily by buying interest in banking and hydropower stocks, pushed the index to its day’s high at around 1:17 PM. However, the inability to sustain gains in the latter part of the session highlights persistent selling pressure, which ultimately dragged the market back down by the close.

Broker-wise data also points toward a cautious, if not bearish, stance among larger players. Seven out of the top ten brokers were net sellers, continuing a trend observed in recent sessions. This indicates that institutional or large investors are still offloading positions, contributing to the overall pressure in the market.

In conclusion, while the NEPSE index remains under short-term pressure, it is currently testing a key technical support zone that could determine its next direction. A decisive upward move forming a higher high from this level could restore confidence and trigger a recovery. However, failure to hold this support, especially alongside strengthening bearish indicators, may expose the market to further downside risks. For now, the market remains in a delicate balance, with investor sentiment and upcoming positive catalysts likely to play a decisive role in shaping the next trend.