NEPSE Falls Again After Brief Recovery, Turnover Shrinks to Rs. 4.43 Billion

After a slight rebound on Monday, the Nepal Stock Exchange (NEPSE) index again slipped on Tuesday, continuing its recent downward pressure. The index dropped by 19.89 points to close at 2,741.97, following a cumulative two-day fall of around 70 points last week and a brief 12-point rise on Monday. Trading volume also declined, with total turnover shrinking from Rs. 5.10 billion on Monday to Rs. 4.43 billion on Tuesday. Analysts interpret the declining turnover amid falling prices as a potential signal that the market may be preparing for a rebound.

The market decline has been linked to ongoing debates over issues such as the Index Number (IZIN) dispute, weighted average calculation method, and margin trading policies, with investors divided in opinion. Prominent investor Tilak Koirala criticized the prolonged stagnation despite high liquidity, low interest rates, and limited alternative investment opportunities. He called for strong measures such as task force formation, margin lending facilities, IPO transparency, reforms in listed companies, compulsory institutional investment, opportunities for NRNs, restructuring of NEPSE, and investor-friendly mechanisms.

All 13 sub-indices closed negative, with the Trading sub-index falling the most by 1.96%, while other groups declined by less than 1%. Nepal Reinsurance topped turnover with Rs. 2.27 billion, followed by Himalayan Reinsurance with Rs. 2.01 billion, and Union Hydropower with Rs. 1.46 billion. On the positive side, Him Star Energy hit the upper circuit limit, while Unnati Sahakarya Laghubitta plunged the most, down 7.47%.

From a technical analysis perspective, analyst Ajit Khanal noted that the market opened with a 15-point gap-up, filled the gap, but failed to sustain momentum. Despite testing the 50-day moving average intraday, it couldn’t break higher, closing at the previous day’s low. This suggests the market is currently moving sideways, and investors should adopt a “wait-and-watch” strategy.

Looking at broker activity, selling dominated among major brokers. Out of the top 10 brokers by turnover, 7 recorded more sell orders compared to buy orders. Brokers 48, 44, and 49 were net buyers, while brokers 45, 58, 34, 42, 62, 56, and 57 leaned towards selling. Notably, broker 44 bought 68% of total MBL shares traded (about 100,000 units), broker 62 purchased 49% of UMHL shares (84,000 units), and broker 59 handled 81,000 units of KBBL. On the selling side, broker 58 offloaded 225,000 units of KBL shares.