Nepali Stock Market Continues Decline

The continuous decline in the stock market persisted on Sunday, with the NEPSE index dropping by 13.53 points to close at 2583.29. Over NPR 4.51 billion worth of shares were traded during the day. Only two sector indices saw a rise, while four companies hit positive circuit levels. The falling market has left investors in a 'wait and watch' position, leading to a decrease in trading volume.

Listed companies are announcing dividends, book closures, and holding annual general meetings, but the stock market continues to trend downward. Analysts suggest this downturn is influenced by investors arranging liquidity to pay off loan installments and interest by the end of the Nepali month of Poush. Additionally, the absence of policy interventions has weakened investor confidence. River Falls Power Limited led the market in trading volume with over NPR 220 million, followed by Janaki Finance and Peoples Power.

Analysts anticipate that the market could rebound if bargain hunters step in to buy low-priced shares. However, they emphasize the need for immediate regulatory action to restore stability.

Five Reasons Behind the Market Decline:

1. Investor Sentiment: Continuous market drops have pushed investors into a 'wait and watch' mode. Fear has driven many to sell their shares, creating downward pressure.

2. Liquidity Management: Investors managing liquidity for loan repayments by the end of Poush have weakened buying demand.

3. Policy Inaction: Lack of concrete measures from regulators, such as the Securities Board, central bank, and Ministry of Finance, has eroded trust.

4. Weakened Credit Flow: Despite adequate liquidity in the banking system, weak credit flow has limited investment.

5. Passive Retail Investors: Many small and new investors follow market trends. With declining trends, these investors have become inactive, further exacerbating the downturn.

Technical Analysis:

Today's market movement formed an Indecision Candle, signaling a potential pullback. The market initially showed an upward trend in the first 15 minutes, reaching the 2614 level. However, selling pressure in finance, development banks, and large-cap stocks led the index to fall to 2570 within an hour, marking a 46-point intraday decline.

Later, demand for hydropower stocks helped the market recover to 2600 but closed at 2583 due to fresh supply in other sectors. Analysts observed that the intraday demand and supply were almost balanced, resulting in the indecision candle formation. Technical indicators had already issued sell signals earlier.

Broker Analysis:

Among the top 10 brokers by trading volume, 4 were net buyers, and 6 were net sellers.

• Broker 58: Bought NPR 245.4 million and sold NPR 205.6 million.

• Broker 62: Bought NPR 219.5 million and sold NPR 204.4 million.

• Broker 34: Bought NPR 179.1 million and sold NPR 200.2 million.

• Broker 45: Bought NPR 170.9 million and sold NPR 188.7 million.

• Broker 42: Bought NPR 178.1 million and sold NPR 148.7 million.

  

In major stocks:

• Broker 62 handled 50% of River Falls Power's total trading volume, including 59% of its total sales.

• Broker 28 accounted for 73% of Nyadi's trading volume, largely bought from retail investors.

• Broker 41 purchased 33% of Janaki Finance's shares, also primarily sold by retail investors.

• Broker 64 offloaded 70% of Barun Hydropower's shares.

  

Regulators are urged to take immediate steps to stabilize the market, while investors are advised to focus on dividend-paying companies and adopt long-term strategies.