NEPSE Continues Downward Spiral: Drops 54.62 Points, Investors in Distress

The Nepal Stock Exchange (NEPSE) witnessed another day of decline on the first trading day of the week, continuing its downward trend. The NEPSE index, which has been falling for the past five trading days, dropped by 54.62 points on Sunday, closing at 2614.68. Alongside this, the Sensitive Index fell by 8.37 points, the Float Index by 3.70 points, and the Sensitive Float Index by 2.86 points. This persistent decline has heightened anxiety and frustration among investors.

On Sunday, a total of 1 crore 23 lakh 71 thousand shares were traded in 72,265 transactions involving 317 stocks, amounting to 6 billion 32 crore 1 lakh 41 thousand rupees. Compared to Thursday’s transaction value of 4 billion 50 crore, the trading volume increased significantly. However, the growth rate of stocks that saw a price increase remained below 4 percent. Mithila Laghubitta Bittiya Sanstha hit the negative circuit level, with its share price dropping by 178.20 rupees to close at 1603.80 rupees.

In terms of transaction value, Himalayan Re Insurance topped the list with 42 crore 6 lakh rupees worth of shares traded. NRNR Infrastructure and Development followed with 36 crore, while Nepal Reinsurance Company recorded 35 crore in trades. These transactions highlight the active participation of large investors in the market.

All 13 sub-indices of the market declined on Sunday. The finance sub-index was hit the hardest, dropping by 2.99 percent. Development banks, hotels and tourism, hydropower, investment, microfinance, non-life insurance, and trading sub-indices fell by more than 2 percent. Banking, life insurance, manufacturing and processing, and other sub-indices also declined by over 1 percent.

Investors have attributed the market’s decline to rumors of political instability. Panic selling has intensified, further driving share prices downward. This has increased the risk of small investors losing their shares at low prices. Analysts suspect that large investors may be adopting a strategy to accumulate shares at cheaper rates, as the increased transaction volume with sluggish price growth supports this speculation.

Technical Analysis: Market Remains Weak

From a technical perspective, all market indicators are showing negative signals. The NEPSE index is currently holding at the support level of 2616, but if this level breaks, the market could slide further to around 2500 points. Analysts suggest that now is not the time to sell and recommend waiting for a "lower high." Despite the steep decline, they still consider this a phase of a broader bull market.

Broker Analysis: Selling Pressure Dominates

Among the top 10 brokers with the highest transactions, four showed relatively higher buying activity, while six leaned toward selling. Broker No. 58 led with a transaction volume of 1 billion 1 crore, buying 44 crore 66 lakh worth of shares and selling 56 crore 74 lakh. Broker No. 34 bought 22 crore 58 lakh and sold 27 crore 65 lakh, while Broker No. 28 bought 23 crore 52 lakh and sold 23 crore 97 lakh. Broker No. 42 purchased 23 crore 85 lakh and sold 23 crore 60 lakh, and Broker No. 57 bought 17 crore while selling 24.5 crore.

In NRNR’s trades, Broker No. 58 accounted for 67% of the total buying, purchasing 1 lakh 77 thousand shares while also selling 1 lakh 78 thousand shares. In Mithila Laghubitta (MLBL), Broker No. 56 bought 96 thousand shares and sold 1 lakh 2 thousand shares. United Manjushree Hydropower (UMRH) saw Broker No. 28 buy 87 thousand shares, while in KBL, Broker No. 58 sold 1 lakh 14 thousand shares. MLBL’s Broker No. 56 also sold 1 lakh 2 thousand shares.

Analysts emphasize that political stability and proactive measures from regulatory bodies are essential for market recovery. The influence of large investors and the losses faced by small investors have eroded confidence in the market. The ongoing decline has forced investors to remain cautious, with little hope for immediate recovery. The market’s future remains uncertain as long as political stability and regulatory action are lacking.