NEPSE: Market Stabilizing After Volatility

During intraday trading, the market dropped by up to 46 points but ultimately closed 7.10 points higher, indicating efforts to recover after a correction. Technically, the market appears stable.

After eight consecutive bullish sessions, NEPSE underwent a correction on the ninth day. However, on the tenth day (Monday, Shrawan 13), the market showed signs of recovery. On Sunday (Shrawan 12), the NEPSE index had climbed to 3013 points during intraday trading but closed at 2964.20 points after falling by 18.44 points. On Monday, the index dropped up to 46 points intraday but ended with a gain of 7.10 points, closing at 2971.31 points. Many investors are interpreting this fluctuation as a normal price adjustment.

The sharp 50-point+ intraday swing on Sunday and Monday reflects intense competition between profit-booking and reinvestment. NEPSE is trying to break the psychological resistance at 3000 points. However, analysts say further consolidation is needed before this level is convincingly surpassed. If NEPSE crosses the 3000–3050 resistance range, it could face the next resistance near 3180–3230. In case of another correction, the support level is expected between 2750–2800 points, according to fundamental analysts.

On Sunday, total turnover stood at NPR 26.57 billion, which declined to NPR 19.36 billion on Monday. Despite the decline in turnover, market stability indicates optimism. Out of 13 sub-indices, 4 increased while 9 declined on Monday. The trading subgroup surged the most by 3.24%, while the finance and development bank subgroups also posted more than 3% growth.

The market's positive sentiment has been supported by the monetary policy, excess liquidity in financial institutions, falling interest rates, and regulatory relaxations. Nepal Rastra Bank has reduced the risk weight of share mortgage loans from 150% to 100%, and the credit limit on collateralized loans has been raised from NPR 150 million to NPR 250 million. Moreover, the CD ratio has dropped to 75%, and over NPR 900 billion in investable funds are available in the banking system. Interest rates on loans have dropped below 8%, encouraging investors to divert funds toward the stock market.

The monetary policy has also made credit flow easier, benefiting investors seeking share-based loans. Despite short-term corrections, the long-term trend remains bullish. New investors are entering the market, and combined with improved monetary policy, better credit flow, and lower interest rates, the overall environment remains positive.

On this day, Samata Gharelu Laghubitta hit the upper circuit, while Sanvi Energy and Trade Tower gained 10% each. In contrast, Bindhyabasini Hydropower declined by 10%, showing the market's risk side. Among the top traded companies were Shivam Cements with NPR 925.7 million, Himalayan Distillery with NPR 770 million, and Ngadi Group Power with NPR 580 million.

Fundamental analysts consider this correction as a “healthy pullback.” The broader trend still appears upward, but investors are advised to remain cautious and make informed decisions based on price movements. Supportive policies, declining interest rates, improved liquidity, and growing investor confidence all point toward a strong long-term outlook.

Technical Analysis Overview

The market showed erratic movements today. In the early session, NEPSE dropped to 2945 within the first 12 minutes. However, by 11:21 AM, it had already rebounded by 9 points. Then, due to continuous selling pressure, the index fell to 2918 by around 12:30 PM. After that, it steadily climbed until 2 PM before slightly correcting and eventually closing 12 points higher. But the 15-minute volume-weighted average price (VWAP) method showed a gain of only 7 points.

Analysts claim that today's selling pressure mainly came from retail investors. After 2 PM, the banking and hydro sectors provided strong support to the market. Surprisingly, the Development Bank subgroup accounted for 16% of total turnover, making it the second-largest sectoral contributor.

Many believe that Tuesday's market move will be crucial for short-term decision-making.

Broker Analysis

Among the top 10 brokers today, 5 had higher buy volumes while the other 5 sold more shares.

• Broker No. 58 bought shares worth NPR 1.20 billion while selling NPR 1 billion.

• Brokers 34 and 42 showed higher selling than buying.

• Brokers 45 and 49 were more focused on buying activities.

Broker No. 58 purchased 108,000 units of KPC while Broker No. 56 bought 100,000 units of SBL.
Also, the circuit-hitting Samata Microfinance saw 81,000 units bought through Broker No. 48.