New government era sees Rs 466 billion market wealth erosion as Nepal Stock Market remains under pressure

KATHMANDU. Nepal’s stock market has come under sustained pressure following the formation of the new government, with investors losing an estimated Rs 466 billion in market capitalization during the initial phase of the current political transition. Despite early optimism after the change in administration, the rally proved short-lived, giving way to prolonged bearish sentiment in the Nepal stock market.

Before the formation of the new government, total market capitalization had reached approximately Rs 5.018 trillion. However, continuous volatility and downward pressure have reduced this figure to around Rs 4.552 trillion, reflecting a sharp erosion of investor wealth.

Market participants estimate that since the change in government alone, investors have lost about Rs 4.66 trillion in paper wealth. The downturn has continued even after the budget announcement, indicating that fiscal policy signals have not been sufficient to restore market confidence.

Post-budget pressure deepens NEPSE correction

Following the budget, the benchmark index of the Nepal Stock Exchange Nepal Stock Exchange (NEPSE) has declined by 122 points, with investors losing nearly Rs 200 billion in additional market value during this period alone.

Although the government has emphasized long-term capital market reforms, the NEPSE index continues to remain under pressure. Market sentiment initially improved after the political transition linked to the post-“Gen Z movement” restructuring, but this optimism gradually faded.

Policy clarity on capital gains tax was expected to stabilize investor sentiment after the budget announcement. However, market performance suggests that confidence has not fully recovered.

Regulatory uncertainty and enforcement actions weigh on sentiment

Investor sentiment has also been affected by rising concerns over financial crime investigations, anti-money laundering enforcement, and legal scrutiny involving businesses and industries. Market participants say these developments have created uncertainty, leading to cautious trading behavior.

The Finance Minister, speaking in Parliament, has also acknowledged that psychological pressure and sentiment-driven factors are influencing market performance.

NEPSE falls again despite rising turnover

On Wednesday, the NEPSE index fell by 14.45 points to close at 2,660.02. This follows a 26.16-point decline in the previous session, reflecting continued bearish momentum.

The Sensitive Index declined by 2.60 points, while the Float and Sensitive Float indices also fell by 0.98 and 0.83 points respectively.

Despite the fall in the index, trading activity increased. Total turnover rose to Rs 4.41 billion, up from Rs 4.36 billion in the previous session. A total of 10.77 million shares were traded across 72,917 transactions.

Sector-wise weakness dominates market

Out of 13 sectoral indices, 11 closed in negative territory. The manufacturing and processing subgroup recorded the steepest decline, falling by 1.10 percent. Most other sectors also dropped by over 1 percent.

Only the finance and trading subgroups posted marginal gains, offering limited support to the overall market.

Select hydropower and microfinance stocks gain amid broad decline

Despite the broader downturn, a few individual stocks posted strong gains. Taksar Pikhuwa Khola Hydropower and Yambaling Hydropower both rose by Rs 59.50 to close at Rs 456.20.

Bhujung Hydropower surged by nearly 14.5 percent, while CYC Nepal Laghubitta gained close to 10 percent, standing out in an otherwise weak market.

On the losing side, Sopan Pharmaceuticals recorded the steepest drop, falling by 5.05 percent.

Turnover leaders dominated by hydropower sector

In terms of trading volume, Ankhu Khola Jalvidhyut Company topped the list with transactions worth Rs 296.2 million. Sopan Pharmaceuticals followed with turnover exceeding Rs 170 million, while United Modi Hydropower recorded around Rs 120 million in trading value.

Liquidity supports long-term outlook despite short-term volatility

Market analysts say that recent political developments, regulatory tightening, and policy uncertainty have contributed to a “wait-and-watch” approach among investors.

However, they also point to strong banking system liquidity, declining interest rates, and a robust IPO pipeline as structural positives that could support long-term growth in the Nepal stock market, even as short-term volatility persists.