NEPSE Extends Weekly Rally by 2.54% Amid Strong Turnover; Market Nears Key Resistance as Momentum Signals Overheating

Kathmandu — Nepal’s stock market continued its upward trajectory this week, with the NEPSE Index climbing 2.54% to close at 2,950.16 points. Compared to last week’s close of 2,877.03, the benchmark index gained 73.13 points, reflecting sustained bullish sentiment among investors. The market also ended the final trading day on a positive note, rising 14.22 points, suggesting that buying pressure remained intact despite approaching a critical resistance zone.

During the week, the index touched a high of 2,969.50 and a low of 2,890.68, recording a total volatility of 78.82 points. This represents a noticeable decline in volatility compared to the previous week’s 125.49 points, indicating that the market is gradually stabilizing even as it trends upward. The sharpest single-day gain was observed on Sunday, when the index surged over 54 points alongside a turnover of Rs 23.59 Arba, setting the tone for the week’s bullish momentum.

Market activity remained robust, with total weekly turnover reaching Rs 82.47 Arba. More than 20.15 crore shares were traded through over 769,000 transactions, highlighting strong participation from both retail and institutional investors. The total market capitalization has now crossed Rs 50 Kharba, a significant milestone that underscores the expanding size and influence of Nepal’s capital market within the broader economy.

From a technical standpoint, momentum indicators suggest that the market is entering an overheated phase. The Relative Strength Index (RSI) stands at 71.14 on the daily timeframe and 70.12 on the weekly chart, both indicating overbought conditions. While this reflects strong upward momentum, it also raises the likelihood of a short-term correction as investors may begin booking profits. However, the MACD remains firmly in positive territory, and the index continues to trade above both the 5-day and 20-day exponential moving averages, reinforcing the broader bullish trend.

Sector-wise performance reveals a broad-based rally, with most indices closing in positive territory. The Trading Index led the gains with an impressive 8.87% rise, followed by the Manufacturing and Processing sector at 6.47% and the Hydropower sector at 4.08%. The Hotels and Tourism sector also posted a solid 2.76% increase, suggesting renewed investor interest in growth-sensitive sectors. Meanwhile, the Banking, Development Bank, and Finance indices recorded moderate gains, contributing to the market’s structural strength.

In contrast, the Life Insurance sector declined by 0.31%, making it the only sector to close in the red, while the Microfinance Index remained unchanged. This divergence indicates the early signs of sectoral rotation, where capital appears to be shifting from previously overvalued or slower-moving sectors into high-momentum segments such as trading, manufacturing, and hydropower.

Technically, the 2,780 level is expected to act as a strong support zone, providing a cushion against any downward movement. On the upside, the 3,000 mark remains a crucial psychological and technical resistance level. A decisive breakout above this level, supported by strong volume, could open the door for further gains and potentially new highs. However, failure to breach this resistance may trigger a short-term pullback, especially given the current overbought conditions.

Overall, the NEPSE market remains firmly in a bullish phase, supported by strong liquidity, positive technical structure, and broad sectoral participation. Nevertheless, the rising RSI levels and proximity to key resistance suggest that investors should adopt a cautious approach. Strategic profit booking, disciplined entry points, and a focus on fundamentally strong stocks are likely to be essential in navigating the market in the coming sessions.