Market Uncertainty Continues: NEPSE Falls Despite Positive Budget Signals, Investors Lean Toward Mutual Funds

Despite a market-friendly budget, a supportive stance from the central bank, and overall economic optimism, the Nepal Stock Exchange (NEPSE) took a sharp dip on Tuesday, raising serious concerns among investors and analysts. While hopes of recovery were high, the unexpected downturn has triggered fresh uncertainty across the market.

On the second trading day of the week, the NEPSE index dropped by 35.73 points, closing at 2,658.93. After two consecutive days of mild gains, the sharp decline signaled renewed weakness. Out of 248 traded companies, 214 saw their stock prices fall, while only 34 gained.

Trading Volume Drops, Market Interest Weakens

Tuesday’s total trading volume shrank to Rs. 6.67 billion, down from over Rs. 9 billion on Monday. The continuous drop in volume reflects declining investor enthusiasm. All 13 sub-indices listed on NEPSE ended in the red. The banking sector was hit the hardest, plunging by 2.34%, followed by hotels & tourism, development banks, microfinance, trading, and investment sectors, each down by over 1%.

Interestingly, Om Megashree Pharmaceuticals and Pure Energy stocks hit positive circuit levels, showing rare bullish momentum. Meanwhile, Radhi Hydropower led the day in total transaction value with over Rs. 600 million, while Saptakoshi Development Bank dropped by approximately 4.5%.

Technical Analysis: NEPSE Still Directionless

Technical analysts had been warning for the past two weeks about a weakening market structure. The NEPSE daily chart remains stuck in a sideways range between 2550 and 2750, with no breakout or breakdown. Despite several attempts, the index failed to breach the 2700 resistance level convincingly.

The chart shows a series of lower highs and lower lows, indicating indecisiveness. The current decline is not backed by heavy volume, meaning there's no massive sell-off — but new buying pressure is also absent. Many recent green candles have formed on low volumes, hinting that market confidence is fragile.

Broker Activity: Mixed Buy-Sell Sentiment

Broker analysis shows mixed sentiment. Out of the top 10 highest-transacting brokers on Tuesday, 6 had more buy than sell, while 4 saw higher selling activity. For instance, Broker 58 led with total trades worth Rs. 595.9 million, including Rs. 305.6 million in buys and Rs. 290.3 million in sells, resulting in a buy/sell ratio of 1.053.

Similarly, Broker 42 bought Rs. 285 million worth of shares and sold Rs. 243 million. Meanwhile, Broker 45 made Rs. 283.3 million in purchases and Rs. 182 million in sales. Brokers 34 and 62 also reported higher buy volumes.