Analysts still say: The market is in a bull run. When will the governor leave?

The stock market continues to decline, with experts suggesting it might go sideways for a few days. The number of panic sellers is decreasing, yet analysts insist the market is still in a bull run.

On the second trading day of the week, Monday, the Nepal Stock Exchange (NEPSE) index closed lower. The market, which had fallen by 21.63 points to 2714.84 on the previous trading day (Sunday), continued its downward trend on Monday. The NEPSE index dropped by 10.14 points to 2704.70. This decline has heightened concerns among investors and raised questions about the market’s momentum.
Along with the NEPSE index, the trading volume also saw a significant reduction. While Sunday recorded a turnover of NPR 6.83 billion, Monday’s turnover was only NPR 5.408 billion, a drop of approximately NPR 1.43 billion. A total of 9.935 million shares of 331 stocks were traded in 57,585 transactions, signaling reduced investor activity and enthusiasm.

Despite some companies showing notable gains, the majority experienced declines. Rapti Hydro & General Construction Ltd. led with a 9.86% increase in its share price, offering relief to investors. Similarly, Samudayik Laghubitta Bittiya Sanstha Ltd. rose by over 8%, and Green Development Bank by more than 5%. However, Mahalaxmi Bikas Bank saw the steepest fall at 5.63%, followed by Ghalemdi Hydro at over 4.5%.

In terms of turnover, Himalayan Reinsurance Ltd. topped the list with NPR 439.3 million, followed by Nepal Reinsurance Company (over NPR 300 million) and Mahalaxmi Bikas Bank (over NPR 220 million). Among the 13 sub-indices, 4 showed slight improvement, 8 declined, and mutual funds remained stable. The trading sub-index fell the most by 3.38%.

Analysts attribute the prolonged decline to profit booking initially, followed by political instability and rumors of coalition changes. They note that reduced turnover suggests fewer panic sellers, with buyers adopting a “wait-and-see” approach. Despite the downturn, analysts maintain the market is still in a bull run, highlighting opportunities in fundamentally strong companies at lower prices.

Technical Analysis:

The daily chart shows the correction as part of a natural cycle. Key support lies between 2680–2699, with further support at 2640–2650 if breached. Resistance is at 2750–2820, with a potential target of 2920–3023 if broken. The market remains within an ascending channel, with support near 2699 and resistance near 2820. Lower volume (NPR 5.4 billion) indicates reduced panic selling.

Broker Analysis:

Broker No. 58 led with NPR 788.7 million in turnover (7.29% market share), followed by Broker No. 56 (NPR 405.8 million) and No. 34 (NPR 389.6 million). The top 10 brokers handled 36% of the market. Broker No. 45 recorded the largest net loss at NPR -537.3 million.

Response:

Predicting exactly when the market will rise is challenging due to ongoing political uncertainty and reduced investor confidence, as reflected in the declining NEPSE index and turnover. However, analysts remain optimistic, asserting the market is still in a bull run, supported by technical indicators like the ascending channel and strong support near 2680–2699. Panic selling appears to have subsided, with lower volumes and fewer sellers, suggesting a potential stabilization or sideways movement in the near term. The governor’s exit isn’t directly tied to market trends based on available data, but political stability could boost sentiment. For now, experts recommend patience and selective investment in fundamentally strong stocks. Would you like a deeper analysis of specific stocks or technical levels?