Market Surges Ahead of Monetary Policy | Banking Sector Rebounds After 11 Months! Wave of Optimism in the Market!

Nepal Rastra Bank is in the final stages of preparing the monetary policy for the upcoming fiscal year 2082/83. Meanwhile, the stock market has already shown signs of enthusiasm. Investors appear optimistic, largely driven by the decisions made by the newly appointed Governor, Dr. Bishwanath Paudel. Shortly after his appointment, Governor Paudel announced a key investor-friendly move by capping the risk weight on share mortgage loans at 100%, a demand investors had been pressing for.

Furthermore, the governor amended working capital loan policies and offered restructuring options for borrowers with loans under NPR 2 crores. These early signals of flexibility and reform suggest that the upcoming monetary policy will likely be accommodative and growth-oriented.

NEPSE Breaks Resistance; New High Possible
In the past two weeks, NEPSE has climbed by 136 points. On Thursday alone, it surged by 25.89 points, closing at 2731.80 – the highest point since Falgun 28. After being range-bound around the 2600 level for a prolonged period, the index has now decisively crossed the 2700 mark, indicating renewed bullish momentum.

Turnover Nears Rs. 10 Billion
Thursday saw 88,615 transactions across 312 stocks, with a total turnover of Rs. 9.68 billion — a notable rise from the Rs. 7.5 billion traded the previous day. This surge in volume suggests the entry of fresh capital and increased investor confidence.

11 of 13 Sub-Indices in Green; Banking Leads
Out of 13 tradable sub-indices, 11 closed in the green. The banking sub-index surged the most — up by 3.02%. Development banks and microfinance sub-indices also gained more than 1%, showing broad-based strength in the financial sector.

Top Gainers and Losers
My Khola Hydropower led the day’s gainers with an 8.15% price increase. Similarly, Mandu Hydropower, Samata Laghubitta, and Bhagawati Hydropower also rose over 6%. Meanwhile, Corporate Development Bank saw the steepest decline, dropping by 9.92%.

Among individual stocks, NRN Infrastructure and Development had the highest turnover at over Rs. 570 million, followed by Butwal Power Company (Rs. 320 million) and Sanima Bank (Rs. 260 million).

Expectations from Upcoming Monetary Policy
Governor Paudel’s early moves—flexible credit policies, liquidity management, and a pro-market stance—have raised expectations. If the new monetary policy follows this trend, NEPSE could soon cross the psychological 2800 mark and potentially test higher levels. Given the current trend, long-term investors may find favorable entry points for quality stocks.

Technical Analysis: Bullish Breakout Confirmed

The NEPSE index formed a morning star candlestick pattern on Wednesday and confirmed a strong breakout above resistance on Thursday. This marks a potential trend shift with an expected higher high (HH) formation.

• RSI stands at 67.68, entering overbought territory, which aligns with bullish momentum.

• MACD has shown a bullish crossover, with both lines crossing above the zero line — a classic signal of upward momentum.

• The index is now trading above the 200-day moving average (200MA), confirming a long-term bullish trend.

• The breakout from the previous 2575–2740 trading range indicates a potential new leg up.

• The banking index also showed a double-top breakout, supported by Rs. 2 billion in trading volume — the first such volume spike in nearly 11 months.

Broker-Level Analysis: Balanced Participation

Analyzing broker activity shows:

• Among the top 10 brokers, buy/sell volumes are balanced.

• 5 brokers recorded relatively higher buying activity, while the other 5 showed higher selling.

• Broker no. 58 reclaimed the top spot, with a total turnover of Rs. 1.62 billion, including Rs. 800 million in buy and Rs. 820 million in sell.

• Broker no. 42 bought stocks worth Rs. 380 million and sold Rs. 360 million.

As the fiscal year nears its end, much of the selling from brokers appears aimed at settling dues. However, retail investors are holding strong, not rushing to sell shares.

The most purchased stock of the day, in terms of buy orders, was NRN, with Broker 58 making the largest purchase.
All technical and fundamental signals align toward a bullish market. Investor optimism, fueled by upcoming monetary policy and strong technical breakouts, could mark the beginning of a fresh upward trend in NEPSE.