NEPSE vs Economic Indicators Nepal (Mid-March 2026)
How does Nepal's stock market stack up against the country's economic fundamentals? This data-driven comparison puts NEPSE's performance alongside key macroeconomic indicators from NRB's 8-month report.
The Scorecard
| Indicator | Value | NEPSE Impact |
|---|---|---|
| NEPSE Index | 2,820.45 (+3.07%) | — |
| GDP Growth | 3.99% | Supportive |
| CPI Inflation | 3.62% | Erodes real returns |
| CB Lending Rate | 8.40% | Negative (high opportunity cost) |
| CB Deposit Rate | 4.54% | Negative (competes) |
| Remittances | +37.67% | Positive (wealth effect) |
| Trade Deficit | Rs. 1.1T | Neutral |
| NPR/USD | 147.94 | Mixed |
| M2 Growth | ~7% | Supportive (liquidity) |
| Market Cap/GDP | 77.69% | Elevated valuation |
Bull Case (NEPSE Positive)
- GDP growth at multi-year high of 3.99% supports corporate earnings
- Remittances (+37.67%) create household wealth that can flow into equities
- M2 growth (~7%) provides broad liquidity support
- Tourism recovery (+15.7% arrivals) benefits hospitality/travel stocks
- Banking sub-index (+6.81%) shows financial sector strength
Bear Case (NEPSE Negative)
- Turnover crashed -69.07% — liquidity drying up
- Lending rate at 8.40% — high hurdle for equity returns
- Deposit rate at 4.54% — risk-free alternative improving
- Inflation at 3.62% — real NEPSE return barely positive (3.07% - 3.62% = -0.55%)
- Market Cap/GDP at 77.69% — historically elevated, limited upside
NEPSE Real Return
NEPSE's nominal return of +3.07% minus inflation of 3.62% = -0.55% real return. Meanwhile, bank deposits offer 4.54% nominal / +0.92% real. On a risk-adjusted basis, deposits currently beat NEPSE — explaining the turnover decline.
Conclusion
NEPSE's modest performance reflects a market caught between supportive growth fundamentals and restrictive monetary conditions. Until interest rates decline or corporate earnings growth accelerates meaningfully, NEPSE is likely to remain range-bound with muted liquidity.