NEPSE Shows Slight Uptick on Wednesday, but Trading Volume Shrinks

The Nepal Stock Exchange (NEPSE) displayed a modest recovery on Wednesday, breaking a two-day downward streak. The benchmark index climbed 9.66 points to close at 2676.28. The Sensitive Index rose by 1.44 points, the Float Index by 0.62 points, and the Sensitive Float Index by 0.50 points. Out of 13 sub-groups, 11 ended in the green, with one company hitting a positive circuit breaker during trading.

However, the market lacked momentum in terms of trading activity. After Tuesday’s turnover of NPR 5.30 billion, Wednesday saw the volume drop to NPR 4.48 billion. A total of 1.73 million shares from 317 companies changed hands across 45,094 transactions.

Market Highlights

Nepal Micro Insurance Company stole the spotlight, with its recently listed shares hitting a positive circuit. The stock surged by NPR 33.20 to close at NPR 365.70. Meanwhile, Win Nepal Microfinance saw an 8% rise, and Bottlers Nepal (Balaju) gained over 5%. On the flip side, Sindhu Development Bank’s stock slumped by 7.47%, marking the day’s steepest decline. In terms of turnover, NRN Infrastructure and Development led with NPR 427.5 million, followed by CDB Holdings with over NPR 300 million and Himalayan Reinsurance with NPR 275 million.

Why the Slow Pace?

The NEPSE has been stuck in a sideways trend for a while now. With Chaitra month-end approaching, investors are feeling the pinch of loan and interest repayments, dampening market activity. This period typically sees the stock market struggle to gain traction. Additionally, investors appear to be in a wait-and-see mode. The third-quarter financial reports of listed companies are due soon, stirring curiosity about their performance.

Policy and Economic Influence

Uncertainty surrounding the appointment of a new governor at Nepal Rastra Bank is another factor keeping investors cautious. The incoming governor’s policies could significantly sway the market, adding to the hesitation. Beyond this, Nepal’s internal and external economic conditions play a role. With the economy currently stable and interest rates relatively low, there’s hope among investors that the stock market could see an upswing in the days ahead.

Sub-Group Performance

The Hotel and Tourism sub-group topped the gains, rising 2.44%. The Investment and Manufacturing & Processing sub-groups also climbed over 1%. However, Banking and Trading sub-groups dipped slightly into negative territory.

While Wednesday’s market offered a glimmer of optimism, the lackluster trading volume and investors’ cautious stance suggest that NEPSE has yet to find its footing. Clear policy direction and sustained economic stability could be the key to unlocking its potential.