Investor Focus Shifts to Microfinance as NEPSE Remains Sideways

In recent weeks, the NEPSE index has remained in a sideways trend, while short-term investors continue to shift their focus across various sectors. Initially drawn to the banking sector after the national budget announcement, investors have now shifted their attention to microfinance stocks following previous interest in hydropower and tourism.

On Tuesday, the NEPSE index declined by 3.90 points, closing at 2,654.75. Market turnover also dropped significantly—from over NPR 13 billion on Monday to just NPR 7.65 billion today.

Out of 13 sectoral indices, 10 sectors declined while only three were in the green. Notably, the microfinance sector rose by over 1%, with 45 out of 50 listed microfinance companies posting gains. Community Microfinance surged by more than 7%, whereas Guardian Micro Life Insurance fell by 4.62%. Hotel and Tourism was the worst-performing sector, down by 1.58%.

Technically, analysts state that NEPSE is currently in a "Higher Low" structure, signaling a sensitive point for trend reversal. If the index crosses 2,700, it could mark a return to a bullish trend. However, a drop below 2,630 could trigger further negative momentum. At present, sub-indices for banking, hydropower, and microfinance are showing positive signals, though the broader market trend remains unclear.

Broker data analysis shows that six out of the top 10 brokers had more buy transactions than sell. Broker no. 45 led the market with NPR 1.14 billion in total trades—NPR 524 million buy and NPR 615 million sell. Sanima Mai Hydropower topped the individual stock turnover list, with shares worth nearly NPR 750 million traded, most of which occurred through broker no. 45.

The continued shift among sectors and declining turnover suggests that short-term traders are driving momentum while long-term investor confidence is yet to recover. Analysts advise investors to remain cautious and closely monitor technical indicators before making decisions.