Double-Digit Recovery in NEPSE, Yet Investor Uncertainty Persists

NEPSE Rises by 18.30 Points; Turnover Also Up, But Market Sentiment Remains Weak

A double-digit recovery was observed in the Nepal Stock Exchange (NEPSE) today, but uncertainty continues to loom over the market. Retail investors, who have been facing prolonged downturns and sideways trends, still lack confidence in the market. On the trading day, NEPSE index rose by 18.30 points and closed at 2,850.37. While this improvement provides a minor positive signal, investor reactions remain cautious.

Even though the market is showing signs of improvement, institutional and large investors are yet to enter aggressively. According to analysts, after reaching the 3,000 level, the index retraced back to the 2,800 range. Many investors are now assessing that the market will continue in a sideways trend for a while and are therefore holding their positions. Some analysts are identifying the 2,780 to 2,800 level as strong support and believe that the market is unlikely to fall below it.

However, many retail investors on social media express that their trust in the market is fading. Having been drained by the consistent downtrend and sideways movement, these investors argue that it will take time to regain confidence. Analysts have also suggested that the current market stagnation may be due to credit-based trading allowed by brokers. After forcibly collecting dues at the end of the previous fiscal month (Asar), brokers extended fresh credit in Shrawan. However, with the pressure to collect those loans again, the market appears to have come under selling pressure.

Along with NEPSE's rise, other sub-indices also increased. The Sensitive Index rose by 2.61 points, the Float Index by 1.06 points, and the Sensitive Float Index by 0.89 points. The total turnover for the day also increased significantly compared to the previous session. While the turnover on Wednesday was NPR 7.63 billion, today's turnover stood at NPR 8.53 billion.

A total of 318 stocks were traded 95,839 times, involving 25.4 million shares. Sikles Hydropower recorded the highest gain of 9.81% today. Similarly, Barun Hydropower surged by over 9% and Makar Jitumaya Suri Hydropower by over 7%. On the other hand, not all stocks were in the green. Sahakarya Laghubitta’s stock dropped by 8.26%, making it the biggest loser of the day.

In terms of turnover, Liberty Energy topped the chart with NPR 390.1 million worth of shares traded. Likewise, Shivam Cements recorded trades of around NPR 370 million and Himalayan Reinsurance exceeded NPR 230 million.

All 13 sub-indices ended in the green today. The Finance sub-index saw the highest gain of 1.38%. The Production/Processing and Others sub-indices also rose by more than 1%, while the rest of the sub-indices posted moderate gains.

Even though the market is showing technical improvements, investor sentiment is still weak. Retail investor morale has not yet recovered. Without strong fundamentals and clear positive signals, it seems difficult for new capital to flow into the market. Today’s recovery has raised short-term hopes, but a more concrete recovery is needed to establish long-term investor confidence.

Let’s Turn to Technical Analysis

From a technical standpoint, the market has shown some degree of positivity. However, analysts say there is still uncertainty about entering the market. According to investor and analyst Ajit Khanal, the NEPSE index showed a strong technical reaction today around the 2,830 level — a support zone — and attempted a green bounce. Based on chart analysis, the market has tested a trendline that previously acted as major resistance and is now acting as support.

Over the past three days, the index had repeatedly tested the 2,830 area. Today’s fourth candle also formed a low near that zone and closed green, which is a technically positive signal. According to Khanal, although the index gave a positive reaction, it weakened after touching the intraday high of 2,861. The market touched the 38.2% Fibonacci retracement level at 2,856.16, then dipped back and bounced from near the 50% level at 2,805.72 before closing green.

The RSI (Relative Strength Index) currently stands at 51.74, which is considered a neutral zone — meaning the market is neither in overbought nor oversold condition.

Now Let’s Turn to Broker Analysis

Looking at broker activity today, 5 of the top 10 brokers recorded more buying, while the other 5 were more inclined toward selling. From Broker No. 4, investors purchased 47,000 shares of Citizen Bank, which made up 50% of the total buy volume of that stock. Likewise, 45,000 shares of MFIL were purchased through Broker 55. On the selling side, nearly 200,000 shares of BHCL were sold through Broker 55. Similarly, 93,000 shares of KPCL were sold through Broker 58.