Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal’s stock market witnessed a sharp decline on the first trading day following the formation of a new government led by Balen Shah, with the benchmark NEPSE Index falling by 71 points.
With the drop, the NEPSE index slipped below the 2,900 mark, closing at 2,879. The market remained in a continuous downward trend throughout the trading session despite expectations of a positive response to the new administration.
Interestingly, while the index declined, total turnover increased significantly. Daily trading volume rose to Rs 15.03 billion, up from Rs 13.16 billion recorded on Thursday.
Market breadth remained heavily negative, with share prices of only nine companies increasing, while 256 declined and one remained unchanged. All sectoral indices closed in the red, indicating broad-based selling pressure across the market.
The finance sector led the decline, dropping 3.38 percent, followed by trading (3.01%), investment (2.98%), development banks (2.89%), banking (2.78%), non-life insurance (2.23%), hotels and tourism (2.25%), hydropower (2.21%), life insurance (2.20%), microfinance (2.11%), and manufacturing and processing (1.07%).
Despite the overall bearish sentiment, six companies hit the 10 percent upper circuit, including Reliance Spinning Mills, Super Khudi Hydropower, Rizline Energy, Suryakund Hydroelectric, Bhujung Hydropower, and Hotel Forest Inn.
Other gainers included CYC Nepal Laghubitta, which rose 7.1 percent, and Solu Hydropower, which gained 3.5 percent.
On the losing side, Unique Nepal Laghubitta dropped 6.17 percent, Himal Dolakha Hydropower fell 5.45 percent, Abhiyan Laghubitta declined 5.39 percent, and Mountain Hydropower Nepal lost 5.37 percent.
The most actively traded stocks included Ridi Power Company, Ngadi Group Power, Solu Hydropower, Shivam Cements, and National Hydropower Company.
Market participants attributed the decline to a mix of profit booking and rising uncertainty linked to recent political developments and enforcement actions. A broker noted that although expectations were high for a post-government-formation rally, investor sentiment was dampened by ongoing crackdowns and protests.
“After a strong rally in previous sessions, many investors were already sitting on profits. The recent arrests and protests appear to have impacted investor psychology, leading to increased selling pressure,” the broker said.
The NEPSE index had gained 73 points last week and had risen from around 2,673 a month ago to nearly 2,950 before Sunday’s trading session. Analysts suggest that some investors may have used the formation of a new government as an opportunity to exit positions at favorable levels, contributing to the sharp decline.
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