Weekly Volatility in NEPSE: Market Trends, Investment Opportunities, and Policy Impacts

The Nepal Stock Exchange (NEPSE) witnessed notable fluctuations during the final week of June 2025, showing a slight decline in the index but a significant rise in trading volume. Despite cautious investor behavior, there is increasing curiosity about the upcoming monetary policy and potential government interventions that could influence market direction.

Daily Market Performance (Asar 12–15, 2082 / June 26–29, 2025)

Thursday, Asar 12 (June 26):

• The NEPSE index dropped 4.45 points to close at 2,595.74.

• The day recorded a total turnover of NPR 7.78 billion, involving the trade of 19.6 million shares.

• Out of 306 traded companies, 93 saw price increases while 155 declined.

• Top gainers included Green Development Bank, Saptakoshi Development Bank, and Barun Hydropower.

• Major losers were Om Megashree Cement/Pharmaceuticals, Pure Energy, Joshi Hydropower, Crest Micro Insurance, and Panchthar Power.

• The Manufacturing & Processing sector remained in the red, with the Hotels & Tourism sector contributing most to the decline.

• The formation of thread-like candlesticks for the fourth consecutive day suggested a potential bullish reversal, reinforced by the appearance of an inverted hammer at the low point.

Sunday, Asar 15 (June 29):

• The market opened the week positively, with the NEPSE index rising by 26.53 points to close at 2,622.28 (some sources report figures ranging from +27.29 to +30.09 points).

• Trading volume dropped slightly to NPR 7.12 billion, with 16.6 million shares exchanged among 328 companies.

• 185 companies saw gains, while 63 declined.

• Saptakoshi Development Bank hit the 9.99% upper circuit, making it the top gainer of the day.

• Joshi Hydropower Development Company lost 5.57%, becoming the biggest loser.

• Based on trading volume, Sahas Urja (NPR 570 million) led the day, followed by Butwal Power, Union Hydropower, Ngadi Group Power, and Radhi Power Company.

• Except for Manufacturing & Processing, all other sectors posted gains, with Banking rising by 2%, and Development Banks and Microfinance advancing by 1.5%. The Life Insurance sector surged by 103.04 points.

• Analysts attributed the upward movement to improved economic indicators and increased liquidity in the banking system.

• Total market capitalization stood at NPR 4.32 trillion, although some discrepancies exist among sources (ranging from NPR 1.47T to 4.41T).

Weekly Summary (Asar 8–13, 2082):

• The market hovered around the 2,600 mark throughout the week.

  • On Sunday (Asar 8), NEPSE fell by 32.93 points.

  • A modest 4.78-point recovery followed on Monday.

  • Tuesday and Wednesday saw minor fluctuations around 2,600 points.

• The week also saw the Nepal Rastra Bank (NRB) absorb NPR 50 billion in liquidity from the market.

• However, the Governor’s comments indicating flexibility on loan restructuring and repayments brought optimism.

• Despite the falling index, rising turnover suggests investors are in a ‘wait-and-see’ mode.

• Short-term profit booking, margin pressures, and the absence of institutional investors contributed to selling pressure during minor downturns.

Technical Analysis and Market Outlook

• A “Rising Three Methods” candlestick pattern has emerged, a bullish indicator suggesting growing investor confidence.

• NEPSE is forming Higher Highs (HH) and Higher Lows (HL), indicating a continued uptrend.

• If upcoming monetary policies align with investor expectations, the index could surpass the 3,000 mark.

• Key resistance levels lie at 2,785 and 3,023, while support levels range between 2,650 and 2,700.

• Investors are advised to follow a Buy/Hold strategy, using the last HL as a stop-loss point for risk management.

• Common tools for analysis include candlestick charts, moving averages, RSI, MACD, Bollinger Bands, and chart patterns like Head & Shoulders, Double Tops/Bottoms, and Triangles.

Investment Opportunities: IPOs, Rights Issues, and Debentures

Nepal’s capital market continues to present numerous opportunities via IPOs, rights issues, and bonds:

• Peoples Power Ltd is issuing a 50% rights share.

• The IPO of Himstar Urja for Nepalis working abroad had its final application deadline on Asar 13.

• Nabil Bank received approval to issue NPR 3 billion debentures (‘Nabil Debenture 2079’).

• Chyangdi Hydropower’s rights share deadline was extended to Asar 27.

• Upcoming IPOs include companies like Bikas Hydropower, Swastik Laghubitta, Darmakhola Hydro Energy, Trade Tower, Sanvi Energy, Pure Energy, Mabilung Energy, Jagdamba Steel, Crest Micro Life Insurance, Guardian Micro Life Insurance, Om Megashree Pharmaceuticals, and Seuri Nyadi Hydropower, among others.

• The Nepal Electricity Authority (NEA) postponed its NPR 60 billion IPO, opting instead to issue a NPR 20 billion bond.

Government Policy and Economic Climate

1. Upcoming Monetary Policy:

Investors are closely watching the upcoming NRB monetary policy, which is expected to:

• Review credit growth limits,

• Improve access to commercial loans,

• Lower interest rates,

• Reduce the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR),

• Remove caps on personal margin loans, and

• Ease margin lending guidelines.

These changes could enhance market liquidity and attract more investor participation.

2. Startup Ecosystem:

• Despite the innovative potential, Nepal’s startup sector remains stunted due to outdated government thinking that favors traditional industries like steel, cement, and garments.

• Key challenges include lack of investment, poor technological support, and insufficient mentorship.

• Major business groups often demand controlling stakes, discouraging startup innovation.

• Only 20% of startups succeed in Nepal; most fail due to a lack of originality, risk-taking, and collaboration culture.

• Although NPR 2.6 billion was allocated to promote entrepreneurship in the past, it remained unutilized, and no fresh budget has been allocated this year.

However, there are promising developments:

• The government declared an “IT Decade”, aiming to export NPR 300 billion worth of IT services and create 500,000 jobs.

• Amendments to the Foreign Investment and Technology Transfer Act now allow Nepali companies to establish branches abroad and repatriate earnings.

• Special Economic Zones (SEZs) are offering tax incentives for IT firms.

• In FY 2080/81, Nepal exported over NPR 28.5 billion worth of IT goods and services in just six months.

3. Non-Resident Nepali (NRN) Investments:

• NRNs have invested over NPR 100 billion in sectors such as finance, hydropower, tourism, agriculture, and IT.

• Unlike other foreign investors, NRNs tend to reinvest earnings and do not immediately repatriate profits.

• Regulatory hurdles are slowly easing, but bureaucratic delays and reliance on personal influence remain issues.

• The minimum investment requirement for NRNs was scrapped in 2079, further opening the door for diaspora capital.

Conclusion

The NEPSE market remains at a critical juncture, balancing between technical bullish signals and policy uncertainty. Investor sentiment hinges on the upcoming monetary policy, with hopes of liquidity-friendly reforms. Meanwhile, growing interest in IPOs and a budding IT sector present long-term opportunities, provided the government takes decisive steps to foster entrepreneurship and investor confidence.