NEPSE Slips Below 3,000 After Hitting Four-Year High

The Nepal Stock Exchange (NEPSE) index dropped 1.59% on Wednesday, July 30, to close at 2,954.14, a day after hitting a four-year high. It had briefly climbed to an intraday high of 3,020.17 before sliding to a low of 2,947.71, to ultimately settle 47.93 points below Tuesday’s 3,002.17.

Investors said they had anticipated a correction after a sharp rally fuelled by the central bank’s monetary policy announced on July 11, ahead of the new fiscal year starting July 17. Since then, the index has closed in the red only three times in 14 trading days.

Nepal Rastra Bank (NRB) Governor Biswo Nath Poudel has placed emphasis on the capital market and real estate sectors to spur economic recovery. Key measures include raising the individual cap on margin loans from Rs 150 million to Rs 250 million. Institutional investors had already seen their lending limits lifted, boosting demand for stock-backed loans.

Earlier, in a policy review in May, the NRB had also reduced the risk weight for stock loans from 125% to 100%.

To ease pressure on banks’ capital adequacy, the NRB now allows regulatory reserves from non-banking assets held for up to two years to be counted as supplementary capital. Banks are also allowed to raise capital with prior regulatory approval.

The policy further introduced flexibility in working capital loan guidelines, permitting sector-specific adjustments for agriculture, small and cottage industries, education, health, media, and sports, based on their revenue and repayment cycles.

Additionally, the NRB proposed reviewing the 15% dividend cap on microfinance institutions. Currently, firms exceeding the cap must allocate significant portions of profits to reserves, client protection, and CSR funds. The proposed revision could ease this restriction.

The index has since closed higher in 11 of the past 14 trading days, rising from 2,731.8 to 2,954.14.

“The market needed a breather,” said a broker. “This correction sets the stage for a more sustainable upward move.”

A red candlestick with a small upper wick formed on the chart, suggesting that further minor corrections could follow in the short term.

NEPSE’s all-time high remains 3,198.60, recorded on August 18, 2021, with an intraday peak of 3,220.33.

Daily turnover on Wedesday fell to Rs 16.44 billion from Rs 18.52 billion on Tuesday, Rs 19.36 billion on Monday, and Rs 26.57 billion on Sunday.

The Sensitive Index dropped 2.07%, the Float Index lost 1.76%, and the Sensitive Float Index declined 2.10%.

Of the 249 listed companies traded, only 23 advanced while 226 declined.

Sanvi Energy Ltd (SANVI) was the day’s top gainer, hitting the upper circuit limit. Its last traded price was Rs 845.90 per share. Trade Tower Ltd (TTL) followed with a 9.99% gain to close at Rs 948.90 per share.

Green Development Bank Ltd (GRDBL) was the biggest loser, falling 8.04% to Rs 1,247.62 per share.

Himalayan Reinsurance Ltd (HRL) led the turnover with transactions worth Rs 1.32 billion. Himalayan Distillery Ltd (HDL) and Shivam Cements Ltd (SHIVM) followed with Rs 732.98 million and Rs 573.37 million, respectively.

Among the 13 sectoral indices, only the Others Index ended in positive territory, up 0.85%. The Microfinance Index led the losers, falling 3.28%, followed by the Development Bank Index, down 3.27%, and the Finance Index, which slipped 2.70%. The Mutual Fund Index posted the smallest loss at 0.10%.

Total market capitalisation fell to Rs 4,929.48 billion on Wednesday from a record Rs 5,009.46 billion the previous day.