Nepali Stock Market Drops by 46 Points: Technical Support at Higher Low Amid Investor Uncertainty

On the first trading day of the week, the NEPSE index, the benchmark of the Nepali stock market, saw a sharp decline. Analysts attribute the fall to profit-booking by some traders, coupled with broader market uncertainty. Key concerns among investors include political instability, discussions about government changes, the arrival of the U.S. Undersecretary of State, and ongoing debates around MCC (Millennium Challenge Corporation) and BRI (Belt and Road Initiative).

The NEPSE index dropped for the third consecutive day, closing 45.93 points lower at 2689.00. This marked the first time in eight trading sessions that the index has fallen below the 2700 mark, last observed on Mangsir 10 (November 26), when it closed at 2683.24. Alongside the main index, the Sensitive Index declined by 6.96 points, the Float Index by 3.05 points, and the Sensitive Float Index by 2.27 points.

Trading volume also saw a decline, with transactions worth NPR 7.46 billion compared to NPR 8.36 billion the previous day. A total of 32.1 million shares of 321 stocks were traded in 81,404 transactions.

Gainers and Losers
Khani Khola Hydropower led the gainers, with its share price increasing by 9.98% to close at NPR 471.60. Dolti Power and Kumari Bank Debenture 2090 also saw significant gains, rising by nearly 9% and over 8%, respectively. However, stocks like Manushi Microfinance, Life Insurance Corporation Nepal, and Joshi Hydropower hit negative circuit levels.

Technical Analysis
Most technical indicators signaled a "sell" at the close, but the market remains supported at a higher low, with 2660 emerging as a critical support level. This indicates that the market is still in an uptrend. Several sub-indices, such as the Banking Index, closed near their respective support zones. For instance, the Banking Index ended at 1413, its primary support level.

The decline is also attributed to geopolitical and domestic political concerns, including the visit of U.S. Undersecretary of State Donald Lu and speculation about the potential fall of the Oli government.

Broker Analysis
Among the top 10 brokers by trading volume, five were heavy buyers, and five were heavy sellers. Broker No. 58 topped the list with NPR 560 million in buys and NPR 300 million in sales, reflecting significant activity from large investors, while smaller investors appeared more apprehensive, selling off shares. Profit booking by some traders also played a role in the market's decline.

NRN Infrastructure & Development was the most traded stock by value, with transactions exceeding NPR 320 million. Broker No. 58 accounted for 50% of the purchases in NRN shares. Similarly, River Falls Power Limited ranked second, with Broker No. 62 holding 57% of the traded volume.

Despite the market decline, NEPSE Trading’s AI Traffic Light system continues to flash a "yellow light," indicating caution but no immediate bearish breakout.