NEPSE Index Declines While Turnover Surges; Closes at 2781, Analysts Warn: “Panic Selling is a Mistake”

On the last trading day of the week, Thursday, Nepal’s stock market witnessed a decline. Analysts pointed out that uncertainty arose in the market after the dividend procedure issued by the central bank a day earlier, though they stressed that the directive itself is a positive development.

The NEPSE index, which had climbed above the 2800 mark on Wednesday, fell by 38.10 points to close at 2781 on Thursday. This marks a retreat below the psychological 2800 level after consecutive gains in recent sessions.

Despite the fall in the index, market turnover surged significantly. Compared to Wednesday’s NPR 7.68 billion, Thursday’s turnover crossed NPR 8.09 billion. According to NEPSE, a total of 178.91 million shares of 322 listed companies were traded 78,379 times.

Development Hydropower Hits Circuit for 7th Day

Freshly listed Development Hydropower once again became the market’s focal point. Its shares hit the positive circuit level for the seventh consecutive trading day. On Thursday alone, the stock gained NPR 51.70 to close at NPR 568.90.

While the company continued its rally, other stocks showed much smaller gains, with growth limited to under 4 percent. On the flip side, Oriental Hotel saw the sharpest decline, plunging 4.71 percent.

Reinsurance & Insurance Companies Dominate Turnover

In terms of turnover, Nepal Reinsurance Company topped the list with trades worth NPR 654.4 million. Close behind, Himalayan Reinsurance witnessed trades exceeding NPR 600 million, while Himalayan Distillery crossed NPR 350 million.

The heavy volumes in these three companies indicate that investor focus remains strong in the insurance and production sectors.

Sub-Indices: Mixed Trends Across Sectors

Out of 13 sectoral sub-indices, only 2 (Mutual Funds and Non-Life Insurance) managed to close in positive territory. The remaining 11 sectors declined.

• Biggest loser: Development Bank sector, down 2.38%.

• Sectors losing over 1%: Finance, Hotels & Tourism, Hydropower, Investment, Life Insurance, Manufacturing & Processing, Microfinance, Others, and Trading.

Analysts’ View: Activity Still Strong

According to analysts, the decline in the NEPSE index but rise in turnover signals that investor participation remains robust. Even though the index slipped below 2800, aggressive buying interest in insurance and reinsurance companies shows investors are not withdrawing.

Experts describe the market as sending “mixed signals” with sub-indices showing divergence. Short-term volatility persists, but strong buying by institutional and big investors indicates that liquidity remains present in the market.

Technical Analysis Perspective

Technically, although the index dropped sharply, analysts say the market has not yet given a “one-candle sell” signal. Thursday’s candle has been labeled a “non-trade” candle, meaning investors are still hesitant to take directional bets.

Importantly, while the 2800 psychological level was breached, the market did not close below 2780, which analysts consider a positive sign for upcoming sessions.

Broker Analysis

Broker-level data showed contrasting activity compared to Wednesday. Among the top 10 brokers by volume, 6 were net sellers while 4 were net buyers.

• Top buyers: Brokers 58, 42, 44, and 17.

• Top sellers: Brokers 45, 34, 57, 49, 62, and 28.

Significantly, Broker 39 alone accounted for the purchase of 123,000 shares of UMHL, representing 36% of the total buying volume, at an average price of NPR 576. Analysts believe this indicates the entry of some large players in the stock.

Similarly, in CGH, Broker 42 executed bulk buying of 123,000 shares at an average of NPR 1071, representing 57% of the day’s total buying. Market watchers suggest this points to “big money” entering the counter, possibly institutional investors.

On the sell side, KBL saw 205,000 shares sold via Broker 45, while UMHL again saw heavy selling, with 138,000 shares disposed through Broker 28.