NEPSE Slightly Up with an Inverted Hammer Pattern, Market Remains Uncertain Despite Surge in Margin Lending

On the first trading day of the week, the NEPSE index closed slightly higher, gaining 0.47 points to settle at 2,655.85. This follows two consecutive bearish sessions last week.

Despite a significant rise in margin lending, the secondary market hasn’t responded with the same level of enthusiasm. According to Nepal Rastra Bank data, margin lending reached over NPR 125 billion by mid-May 2025 (Baisakh-end, FY 2081/82), which is NPR 35 billion higher than the same period last year. In FY 2080/81, the total margin lending was about NPR 90 billion, and it was just NPR 80 billion in FY 2079/80.

Nabil Bank leads in margin loan disbursement with over NPR 14.59 billion lent, followed by Global IME and Kumari Bank. Development banks have issued around NPR 18 billion, while finance companies have crossed NPR 4 billion in margin loans. Loans above NPR 10 million surged by 53%, crossing NPR 85 billion.

However, NEPSE continues to hover between 2,600 and 2,700 points, with daily turnover stagnating around NPR 6–7 billion. Market analysts suggest that investors are waiting for more clear policy signals. Investor sentiment remains cautiously optimistic following the appointment of new NRB Governor Bishwanath Paudel. The recent monetary policy revision reducing the risk weight of margin lending from 125% to 100% has provided some relief, but its impact is yet to reflect in market momentum.

Technical Outlook: Inverted Hammer Indicates Indecision

Sunday’s candlestick closed in an Inverted Hammer formation, indicating market indecision following recent bearish momentum. The candle tested the middle Bollinger Band but failed to break above it, showing continued resistance. The 50-day moving average remains a strong technical barrier, and the Death Cross is still in play, indicating the market may still be in a downtrend.

If Monday's session closes above today's high, it would confirm the inverted hammer and could signal a short-term bounce. Notably, the final 20 minutes of Sunday’s trading saw increased activity in large and mid-cap hydropower stocks like Sanima Mai, Ngadi Group, and Butwal Power, helping the market avoid a sharper decline. However, a familiar pattern of selling pressure emerged 15 minutes after market open, reflecting underlying uncertainty.

Top Gainers, Turnover & Circuit Hits

Green Development Bank, Pure Energy, and Chhyangdi Hydropower hit their upper circuit limits today. Barun Hydropower surged nearly 10%, and Union Hydropower gained over 9%. Sanima Mai led trading turnover with NPR 890 million, followed by Ngadi Group (NPR 870 million) and Butwal Power Company (NPR 640 million).

Sectoral Movement

Out of 13 sector indices, 5 closed higher and 8 declined. The Manufacturing & Processing sector rose 1.47%, and Trading gained over 1%. However, Banking, Finance, Microfinance, Insurance, Mutual Funds, Hotels, and Others all ended in the red.

Broker Analysis: Mixed Signals

Among the top 10 brokers, 4 had more buy transactions than sell, while 6 showed higher sell volume. Broker No. 45 led in volume with NPR 1.32 billion in turnover (NPR 645 million buy, NPR 677 million sell). Broker No. 58 recorded NPR 1.13 billion (NPR 533 million buy, NPR 596 million sell). Brokers 34 and 57 also showed stronger buy-side activity.

Previously, large brokers were accumulating, but today’s data reveals emerging selling pressure from top players, signaling caution.

Conclusion

Despite a rapid rise in margin lending and monetary easing, the market hasn’t responded with a breakout. Investors appear to be in wait-and-see mode, anticipating policy clarity. The technical structure suggests indecision, and only a strong bullish close above today's high would confirm a short-term recovery.