Stock Market Declines Again, Investors’ High Hopes Turn to “Water on Sand”; Technical Analysts See Correction Phase Nearing Its End

Kathmandu, Aug 11 — After showing gains last Thursday, Nepal’s capital market fell again on Monday, continuing its downward trajectory despite having risen earlier on the back of the current fiscal year’s monetary policy.

With the market’s decline, investor sentiment has weakened. A few weeks ago, when NEPSE climbed above 3,000 points, many investors purchased shares expecting the index to surpass 3,200. Now, those high-return expectations have turned into losses, with investments “like water on sand” due to market manipulation and mafia influence, fueling investor frustration.

Meanwhile, financial reports of banks and financial institutions for FY 2081/82 are being published. While most companies are showing profit growth and improved dividend capacity, this has failed to positively impact the market. Past experiences with companies showing unrealistic profits before collapsing have made investors hesitant to trust current reports.

Analysts say that despite fundamental indicators being positive, if the market fails to rise under the current circumstances, it may remain stable or sluggish for a longer period.

On Monday, the NEPSE index fell by 27.90 points to close at 2,822. Although the market started positive, it turned downward just 32 minutes into trading. The day’s highest point was 2,875. Despite the fall in the index, trading volume increased to NPR 10.21 billion compared to NPR 8.53 billion in the previous session. Shares of 30 companies gained, while 220 declined. Microfinance (-2.35%) and Development Bank (-2.31%) were the most affected sector indices. Other sector losses included Banking (-0.41%), Finance (-1.27%), Hotels & Tourism (-0.76%), Hydropower (-1.41%), Investment (-1.17%), Life Insurance (-0.80%), Manufacturing & Processing (-0.75%), Non-life Insurance (-1.24%), and Trading (-1.44%). The “Others” sector rose by 0.31%.

Individually, River Falls Power gained 10% to lead the market, followed by Panchakanya Mai Hydropower (+6.87%) and Buddhabhumi Hydropower (+3.47%). Unnati Sahakarya Laghubitta lost 7.64%, making it the biggest loser, while Liberty Energy, Trade Tower, CYC Laghubitta, and Win Nepal Laghubitta all fell over 5%. The top traded stocks by volume included Shivam Cement, Himalayan Reinsurance, Nepal Reinsurance, Sahas Urja, and Butwal Power. Market capitalization dropped to NPR 4.711 trillion.

Technical Analysis
Technical analysts had predicted a sell signal when the market was around 2,950, with expectations that NEPSE would drop to the 2,780–2,800 range. The market has been following that trend. Despite attempts to rise, both the index and trading volume have failed to gain momentum. Analysts see the increase in turnover during a declining market as a negative sign. However, they also note that the current correction phase is close to ending, and if the market rebounds from current levels, it may avoid dropping to the 2,780–2,800 range.

Broker Analysis
Based on Monday’s top 10 brokers by turnover, six brokers made more buys than sells, while four sold more than they bought. This suggests that some large investors may be inclined to accumulate shares.

By stock, Global IME Bank saw investors purchase about 50% of the total buys (129,000 shares) from Broker No. 28, at an average price of NPR 257. First Microfinance had 62% of its total buys from Broker No. 58, at an average price of NPR 903. Laxmi Sunrise Bank had 62% of its total buys (101,000 shares) from Broker No. 58 at NPR 236. However, from the same broker (No. 58), investors sold 500,000 shares of Laxmi Sunrise Bank.