Historic Optimism in NEPSE: Investor Confidence Surges Amid Policy Shift and Technical Strength

A wave of historic optimism has returned to Nepal’s stock market as both the government and Nepal Rastra Bank (NRB) unveil coordinated policy support. On the first trading day of the fiscal year 2082/83 (corresponding to mid-July 2025), the NEPSE index surged by 75.84 points to close at 2870.63, reflecting a strong rebound in investor sentiment. The total turnover also hit an impressive NPR 16.59 billion — the highest in nearly 11 months.

The NRB’s monetary policy, announced last Friday, came into immediate effect. Key among the provisions is the increase in the individual share loan ceiling from NPR 15 crore to NPR 25 crore, a long-standing demand of investors. In addition, banks can now raise capital through rights issues, and the interest rate corridor has been revised — the upper limit reduced from 6.5% to 6%, and the lower limit from 3% to 2.75%. The central bank also indicated a review of the dividend restrictions imposed on microfinance institutions.

Until last year, high interest rates, liquidity constraints, and tight margin lending regulations had weakened market momentum. The situation has now reversed. Falling deposit rates are discouraging savers from parking funds in banks, pushing them instead toward equity investments. With reduced lending demand, banks are further lowering interest rates, bringing the average base rate down to 6.09%, creating an environment of cheap credit and renewed investor entry.

All 13 sectoral sub-indices closed in the green. The ‘Others’ sub-index led the rally with a 5.09% gain. Hydropower, life insurance, and investment sectors each gained over 3%, while finance, microfinance, hotel and tourism, and non-life insurance also posted gains above 2%. This broad-based rally suggests that investors are now shifting from sector concentration to diversified, long-term strategies — a positive signal for macroeconomic balance.

Thursday’s transaction volume was the highest since September 2024 (Bhadra 11, 2081), when the turnover was NPR 18.46 billion. The all-time record stands at NPR 29.3 billion on Shrawan 31, 2080. Given the current momentum, analysts see the potential for such records to be challenged once again.

The coordinated effort by NRB and the government has rekindled market energy. With favorable monetary policy, lower interest rates, accessible credit, and regulatory reform, investor confidence is visibly on the rise. If such policy continuity is maintained, the current uptrend could evolve into a long-term structural recovery.

Moreover, investors are now visibly engaging in sectoral rotation — a sign of market maturity. They’re beginning to shift allocations strategically rather than following trends blindly.

Technical Analysis: Weekly Chart Shows Strong Bullish Setup

While daily candlesticks have regularly been used to gauge market behavior, the current analysis focuses on the weekly chart. Post-monetary policy, the surge in price action and volume is clearly evident. NEPSE closed the week at 2870.63, up 75.84 points, with a transaction volume of NPR 16.59 billion — the highest in nearly a year.

The monetary policy has driven funds away from low-yield deposits into more aggressive equities. The weekly chart shows NEPSE rotating within a large 2600–3000 range since 2022. Over the past four weeks, the index has made successive higher lows, and volume has increased gradually — an indicator that the market is preparing to challenge and potentially break above the upper resistance level around 3000.

The weekly MACD has turned decisively bullish. The MACD line has crossed above the signal line, and the histogram is moving into positive territory. According to analysts, if this trend continues, the index could break through the psychological barrier of 3000 and enter a new bullish leg.

Broker Analysis: Big Brokers Show Mixed Sentiment, High Turnovers

On Thursday, out of the 10 largest brokers, 4 executed more buy orders than sell orders — indicating buying pressure — while the remaining 6 tilted more toward selling. Overall, top brokerages posted impressive turnovers. Notably, 5 brokers crossed NPR 1 billion in trading volume — Brokers 58, 34, 42, 45, and 49. Among them, Broker 58 alone registered a turnover close to NPR 2 billion.

In terms of stock-specific trades:

• Global IME Bank saw 1,94,000 shares bought through Broker 28, comprising 35% of its buy-side activity.

• NRIC shares were heavily bought through Broker 55 (1,94,000 shares).

• Everest Bank (1,20,000 shares via Broker 44) and Prime Commercial Bank (1,06,000 shares via Broker 52) also saw significant interest.

On the sell side:

• UMHL witnessed 2,12,000 shares offloaded via Broker 62.

• Excel Development Bank recorded sales of 69,000 shares through Broker 65.

These data reflect growing activity from major institutions and retail segments, both aggressively repositioning for what many see as the beginning of a structural bull market.

NEPSE is not merely witnessing a price rise; it's undergoing a behavioral and structural shift. From investor psychology to fiscal policy alignment, every element is contributing to a bullish revival. If these trends persist, Nepal’s capital market may soon break historic thresholds — not only in numbers but also in confidence.