Big Players Under Scrutiny, NEPSE at a Critical Juncture: Will the Market Stabilize or Slip Further?

Kathmandu — Nepal’s stock market enters the new trading week under a cloud of uncertainty, as regulatory crackdowns on major market players collide with weakening technical signals and declining liquidity. While the NEPSE index managed a modest recovery on the final trading day of last week, the broader structure of the market continues to reflect fragility rather than strength.

In a dramatic turn of events, several influential figures associated directly or indirectly with the stock market have come under investigation and arrest. Among those reportedly linked to ongoing scrutiny are former Energy Minister Deepak Khadka, businessman Deepak Bhatt, and entrepreneurs Shankar Agrawal and Sulabh Agrawal. Market insiders suggest that the removal or restriction of such large players has disrupted the usual flow of high-volume transactions.

Some analysts argue that the absence of these “big hands” has temporarily reduced large-scale selling pressure, potentially creating room for a technical rebound. However, an opposing view is gaining traction — that the crackdown has injected fear into the market, discouraging participation and weakening investor confidence. A broker, speaking on condition of anonymity, warned that certain brokerage houses could face severe financial stress if liquidity tightens further.

Concerns are also emerging from the banking sector. According to market estimates, several large intermediaries had leveraged positions backed by significant loans. If these entities fail to meet their obligations, the stress could spill over into banks, raising systemic risks beyond the equity market itself.

Against this backdrop, NEPSE closed the previous week at 2,782.18 points, down 167.98 points or 5.69 percent from the prior week’s close of 2,950.16. Despite three days of gains during the week, two sharply negative sessions dragged the index lower, highlighting the dominance of selling pressure.

Technical indicators paint a cautious picture. On the daily chart, the index is struggling around the 2,788 resistance level — a key “make or break” zone. Earlier, this region had signaled a short-term shift in trend, but recent candlestick formations show strong rejection from higher levels. The presence of long upper wicks indicates that attempts to move toward the 2,900–2,960 range were met with aggressive selling.

Moreover, the latest price action suggests a renewed bearish shift in market structure, increasing the probability of further correction. If the index fails to hold above the 2,788 level, analysts warn of a potential decline toward 2,608. A deeper fall could test 2,568 and even 2,530 in the near term.

Market participation has also weakened significantly. Average daily turnover dropped by over 27 percent to around NPR 12 billion, compared to NPR 16.49 billion in the previous week. Similarly, both transaction volume and the number of trades declined, indicating reduced investor engagement and a lack of strong buying support. This aligns with what analysts describe as a “distribution phase,” where large positions are being offloaded without sustained demand.

The broader market performance reinforces this cautious outlook. Out of 13 sector indices, 12 declined during the week. Only the manufacturing and processing sector posted a modest gain of 2.02 percent. The “Others” sector recorded the steepest fall at 10.15 percent, while the life insurance sector saw the largest drop in absolute terms.

Market capitalization also took a hit, shrinking by NPR 279 billion to settle at NPR 47.30 trillion. This reflects a substantial erosion in investor wealth within just one week.

Despite the negative sentiment, certain individual stocks witnessed sharp gains. Reliance Spinning Mills surged by over 61 percent, while Super Khudi Hydropower, Bhujung Hydropower, and Hotel Forest Inn also posted similar increases. On the downside, Nepal Reinsurance Company declined by 15.60 percent, with Mountain Hydro Nepal also recording significant losses.

From a broader perspective, the weekly chart shows that NEPSE remains trapped within a wide consolidation range between 2,600 and 3,000 points. The latest weekly candle is bearish, confirming continued selling pressure at higher levels and suggesting that the market has yet to establish a clear long-term upward trend.

As trading resumes today, the market stands at a critical crossroads. If the index manages to sustain above the 2,788 level, a short-term recovery toward higher resistance zones could unfold. However, failure to hold this level may trigger renewed selling, pushing the index back toward key support areas.

In the current environment — shaped by regulatory action, liquidity concerns, and fragile technical structure — analysts advise investors to remain cautious. Entering the market without clear confirmation signals could expose participants to heightened risk, as the balance between fear and opportunity continues to define NEPSE’s trajectory.