Nepal's stock market witnessed a notable rally on Sunday, July 13—the first trading day since the announcement of the monetary policy for fiscal year 2025/26, which begins on Thursday.
Eight out of 13 sectoral indices closed higher, with the Microfinance Index posting the largest gain at 3.5%, followed by a 3.37% rise in the Banking Subindex. Among the top 10 gainers, seven were microfinance companies, two were banks, and one was a hydropower firm.
Notably, the Hydropower Index saw the sharpest decline, falling 0.83%.
The Nepal Stock Exchange (NEPSE) Index climbed 1.06% (or 29 points), closing at 2,760.80. The market surged immediately after opening, touching an intraday high of 2,797.74 before retreating to a low of 2,757.89. This follows gains of 0.95% last Thursday and 0.82% Wednesday after four consecutive days of losses.
[Read: Nepal Rastra Bank Focuses on Reviving Economy via Real Estate and Stock Market ]
Investors had expected a stronger rally, as the monetary policy, introduced by Governor Dr Biswo Nath Poudel, prioritised capital market and real estate sector reforms to revitalise the economy. Still, Sunday’s performance was seen as an encouraging sign of potential upward momentum in the days ahead.
Total market capitalisation rose to Rs 4,600.37 billion, up from Rs 4,551.57 billion last Thursday.
“Considering moderate inflation, comfortable foreign exchange reserves, and the broader economic outlook, the monetary policy has been kept cautiously flexible to revitalise the economy,” Governor Poudel said during the policy announcement.
Key among the policy measures was the increase in the individual margin loan cap from Rs 150 million to Rs 250 million. Stock loans were already on the rise, following the removal of the ceiling altogether for institutional investors earlier. The latest revision is expected to further fuel market activity.
During his policy review in May, Governor Poudel had reduced the risk weight on stock loans from 125% to 100%, signalling a market-friendly stance.
To encourage credit expansion, Nepal Rastra Bank (NRB) also announced provisions to ease pressure on banks’ capital adequacy. For instance, regulatory reserves from non-banking assets held for up to two years can now be counted as supplementary capital. Banks will also be permitted to raise capital with NRB’s approval.
The central bank is easing its position on working capital loans as well. The new policy allows guideline adjustments based on the nature of businesses—such as agriculture, small and cottage industries, education, health, media, and sports—and their revenue and repayment cycles.
Analysts said investor interest in microfinance companies was renewed after the monetary policy mentioned the reviewing of the current 15% dividend cap. Institutions distributing dividends above that threshold have to allocate significant portions to reserve, client protection, and corporate responsibility funds. The new policy indicates flexibility on that front.
Sunday’s market turnover exceeded Rs 11.41 billion, up from Rs 9.68 billion the previous trading day. Over 32.59 million shares changed hands across 105,415 transactions—compared to 26.47 million shares in 88,615 trades last Thursday.
The Sensitive, Float, and Sensitive Float indices also posted gains of 1.94%, 1.36%, and 1.99%, respectively. Out of 248 listed companies traded, 158 advanced while 90 declined.
NIC Asia Bank Ltd. (NICA) and Khanikhola Hydropower Co. Ltd. (KKHC) were the day’s top gainers, each rising by 9.99%, with closing prices of Rs 405.40 and Rs 291 per share, respectively. Himalayan Hydropower Limited (HHL) recorded the steepest loss, falling 9.93%.
NIC Asia Bank led in turnover as well, recording Rs 371.5 million in trades. Butwal Power Company Ltd. (BPCL) and NRN Infrastructure and Development Ltd. (NRN) followed with Rs 328.6 million and Rs 285.4 million, respectively.
