Spinning Top Candle in NEPSE, Indicating Reversal Amid Market Fear

The Nepalese stock market closed lower for the fifth consecutive day. On the second trading day of the week, the NEPSE index struggled to surpass the psychological level of 2,700 points and remained sluggish. Today, the NEPSE index declined by 10.98 points, settling at 2,677.32 points. A total of over 14.4 million shares of 322 companies were traded, amounting to a transaction value of only NPR 6.96 billion.

Based on transaction volume, Nepal Republic Media led the market with trades worth NPR 244.4 million, followed by CEDB Holdings and Saptakoshi Development Bank in second and third positions, respectively.

The NEPSE index repeatedly approached the 2,700-point mark but failed to sustain itself, weakening investor confidence. The daily transaction volume, which exceeded NPR 11 billion last week, has been decreasing. The decline in both the index and transaction volume has triggered fear in the market. The pressure from sellers has pushed the market downward, while short-term traders are booking profits and waiting for lower prices to re-enter, further impacting market momentum.

The market is currently awaiting the monetary policy review. The central bank is preparing for its semi-annual review, which is expected to provide new direction to the market. Banks have started offering share mortgage loans at lower interest rates, and liquidity remains sufficient in the banking system. The government also appears positive toward stock market reforms. However, experts suggest that the market requires certain policy improvements.

Technical Analysis

On Monday, the NEPSE index dropped by 10.98 points to close at 2,677.32. According to technical analysis, the index is currently trading near a crucial support zone, where a Spinning Top Candle has formed, signaling a potential reversal. The index has been struggling to cross the 2,700 mark, with buying and selling pressures keeping the market uncertain.

Despite the MACD still being in a bullish crossover, signs of weakness are emerging. Meanwhile, the Ichimoku Cloud indicates strong support. If the market sustains the 2,650–2,665 support level, it could rebound towards 2,785 points and later reach 3,023 points. However, if the support level breaks, further correction could be seen, prompting investors to remain cautious.

Broker Analysis

An analysis of share transactions by the top 10 brokers shows that Broker 58 led the market with transactions worth NPR 67 , capturing 4.846% of the total market share. Its total purchase volume stood at NPR 33.48 billion, while its sales volume was NPR 33.96 billion, maintaining a buy/sell ratio of 0.986, indicating a balanced approach between buying and selling.

Similarly, Broker 49 had the highest buy/sell ratio of 1.022, showing more buying activity, while Broker 28 recorded an even higher ratio of 1.418, suggesting a strong buying strategy. In contrast, Broker 56 had the lowest buy/sell ratio of 0.674, indicating that selling pressure dominated.

Based on total transaction volume, Broker 45 and Broker 42 ranked second and third with transactions worth NPR 51.63 billion and NPR 50.26 billion, respectively. The trading behavior of these brokers suggests that while some are booking short-term profits, others are accumulating shares for long-term investment, which will directly impact market volatility in the coming days.

Stock-Specific Analysis

Analyzing the shares bought and sold by leading brokers, MEL was the most heavily purchased stock. Broker 65 acquired 43.58% of MEL's total transaction volume, buying 67,310 shares at an average price of NPR 364.89 per share. Similarly, RNLI (40.33%) and HDHPC (31.77%) were also among the most bought stocks, followed by PRVU (30.99%) and HIDCLP (31.54%).

On the selling side, BEDC saw the highest sell-off, with 50.67% of its total volume sold. Other heavily sold stocks included ULHC (38.03%), HDHPC (36.91%), and MEL (35.68%). In the banking sector, PRVU was also heavily sold, with 34.51% of its volume liquidated.

This analysis indicates that investor interest remains strong in the hydropower and banking sectors. Long-term investors are actively buying, while short-term traders are booking profits. Such trading behavior creates market fluctuations, directly influencing investor sentiment.

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