NEPSE on the Verge of a Super Bull: Will the 2780 Resistance Break?

Market Momentum Shifts as Large-Cap and Mid-Cap Stocks Gain Strength

Nepal's stock market has entered a critical phase as NEPSE hovers around 2,727 points, with investors closely watching the 2,780 resistance level. Analysts predict that if this level is breached, the market could enter a strong bullish phase, possibly leading to a new all-time high.

A notable shift has been observed in recent trading sessions, where large-cap and mid-cap stocks have started gaining traction. On Monday, the NEPSE index surged by 29.87 points, closing at 2,727.91, fueled by increased trading in high-capitalization companies. This surge has injected fresh optimism into the market, with some analysts arguing that a super bull could be on the horizon.

Market Performance Overview

On Monday, six stocks hit their upper circuit limit, and 10 out of 13 sub-indices closed in the green. The commercial banking sector led the rally with a 2.16% gain, signaling renewed investor confidence.

• Total trading volume crossed NPR 10 billion, marking a significant liquidity boost.

• 302 companies were actively traded, with over 18 million shares changing hands.

• Nepal Reinsurance Company led the market with NPR 3.26 billion in transactions, followed by CEDB Hydropower Holdings and NRN Infrastructure.

For investors, breaking the 2,700 resistance was a crucial milestone. Now, all eyes are set on 2,780, a key psychological and technical barrier. If NEPSE surpasses this level, analysts anticipate a strong bullish run, with the next profit-taking level projected around 3,023 points.

Key Market Indicators and Technical Analysis

1. Higher Highs and Higher Lows Forming a Bullish Structure

NEPSE has been maintaining a pattern of higher highs and higher lows, a classic indication of an upward trend. This suggests that the downward pressure is weakening, and bullish sentiment is strengthening.

• Support Level: 2,660 points

• Immediate Resistance: 2,780 points

• Breakout Target: 3,023 points (which could confirm a super bull phase)

2. Change of Character Indicates Shift from Bearish to Bullish Trend

Technical analysts have observed a change of character (CHoCH) in the market structure, signaling that the bearish phase is ending and a new uptrend is forming.

• A breach of 2,780 points would signal a strong bullish breakout.

• If NEPSE fails to break 2,780, a temporary pullback to 2,660 could occur before resuming the uptrend.

Broker Analysis: Increased Buying Pressure

Market sentiment is also being reflected in brokerage activity. Among the top 10 brokers, 6 were net buyers, while 4 were net sellers.

• Broker No. 58 led the buying side, with NPR 1.23 billion in transactions, accounting for 6.12% of total market volume.

• Broker No. 34 and 42 were also active on the buy side, maintaining a buy/sell ratio above 1.1, indicating strong accumulation.

• Broker No. 45 and 49, on the other hand, were net sellers, suggesting profit-taking at current levels.

The banking sector emerged as the most heavily traded, with Broker No. 58 leading purchases in commercial bank stocks. Hydropower stocks also saw significant activity, with Broker No. 33 and 17 accumulating positions in leading hydropower firms.

Macroeconomic Factors: Will Monetary Policy Review Provide a Boost?

The upcoming monetary policy review on Falgun 15 is another major event that could determine market direction. Insiders suggest that the Nepal Rastra Bank (NRB) may introduce modifications to margin lending policies, potentially easing liquidity constraints in the stock market.

Key expectations from the policy review include:

• Possible relaxation in share mortgage lending, which could boost market liquidity.

• Short-term investment flexibility for banks and financial institutions, increasing market participation.

• NRB Governor Maha Prasad Adhikari’s final policy review, which is expected to set a decisive tone for the banking sector.

Investors are closely monitoring these developments, as favorable policy changes could act as a catalyst for NEPSE to break the 2,780 resistance and trigger the next bullish leg.

Conclusion: Is the Super Bull Coming?

While NEPSE has shown strong momentum, the 2,780 level remains a crucial test. If the index successfully breaks this resistance, a bullish surge toward 3,023 points is expected.

Factors supporting the bullish outlook:
✅ Large-cap and mid-cap stocks gaining traction
✅ Higher trading volumes exceeding NPR 10 billion
✅ Technical indicators showing a sustained uptrend
✅ Increased broker buying activity
✅ Potential favorable monetary policy adjustments

However, failure to break 2,780 could result in short-term consolidation or a minor correction toward 2,660 before another bullish attempt.

With sentiment improving and technical indicators aligning, NEPSE is at a pivotal point. If the market continues its momentum, Nepal may soon witness a super bull run, setting the stage for record-breaking highs. The coming weeks will be crucial.