Market Declines Again: Despite Higher Turnover, All Indices in Red; Market Around 50–Day Moving Average, RSI Below 40

Kathmandu — Nepal’s stock market extended its downward trend on Sunday, the first trading day of the week. Despite a rise in turnover compared to Thursday, all sectoral indices closed in red, indicating growing selling pressure among investors.

The NEPSE index fell by 27.14 points to close at 2,761 points, down from 2,788 on Thursday. Continuous declines over recent sessions have heightened panic selling as investors attempt to minimize losses through stop-loss strategies, resulting in stronger selling pressure than buying demand.

On Sunday, shares of 249 companies worth NPR 7.73 billion were traded, slightly higher than Thursday’s NPR 7.46 billion. However, the increased turnover failed to lift the market. Prices of 58 companies advanced while 191 declined, with all 13 sub-indices ending in negative territory. Trade, Others, Microfinance, Manufacturing & Processing, and Banking sub-indices dropped more than 1 percent. Analysts note that back-to-back double-digit losses have fueled panic among investors.

The index, which had touched 3,002 points on July 28 (Shrawan 13), has since been under consistent downward pressure, slipping below the 2,800 mark and now hovering around 2,760.

Among the top gainers, RBB Mutual Fund–1 surged 7.93 percent, Upper Syange Hydropower rose 6.29 percent, while Kalika Power and Upper Hewakhola Hydropower advanced by over 5 percent each. On the losing side, Sampada Microfinance plunged 7.06 percent, the biggest loser of the day, while Trade Tower Ltd. fell 5.88 percent.

By transaction volume, Nepal Reinsurance Company topped the list with NPR 516.7 million worth of shares traded. It was followed by Himalayan Reinsurance Company with NPR 354.5 million and Nepal Republic Media with NPR 249.6 million.

Market analysts believe continuous declines are creating significant psychological pressure on investors. With selling pressure dominating buying interest, the market is expected to remain unstable in the near term.

Technical Analysis

The NEPSE index, which had formed a peak at 3,028, has been falling steadily since then. Sunday’s close at 2,761 brought the market to an important technical level. According to technical analyst Ajit Khanal, the market has now reached the 50-day moving average (50MA), which also aligns with the 61% Fibonacci retracement level. He considers this zone (2,750–2,760) as strong support.

“If the index fails to rebound positively from this range, investor panic could intensify further,” Khanal warned. He added that the Relative Strength Index (RSI) has already slipped below 40, signaling weakness in market momentum.

Though turnover increased slightly compared to Thursday, analysts noted that rising turnover during a falling market is not a positive signal. It instead confirms that selling pressure remains stronger.

Broker Analysis

Data from the top ten brokers showed an almost equal balance between buy and sell transactions. Among them, five brokers were more active on the buy side, while five dominated on the sell side.

Notably, Broker No. 58 (KPC Capital) saw investors purchase 142,000 shares, and Broker No. 62 (UMHL) facilitated the purchase of 111,000 shares. On the other hand, Broker No. 55 (BHL) recorded the sale of 365,000 shares, while KBL investors sold over 225,000 shares.

This indicates that while buying and selling volumes appear balanced at the broker level, the supply side has remained dominant in the final trading sessions, keeping the market under selling pressure.