In a continued downward trend, the Nepal Stock Exchange (NEPSE) recorded a significant loss of 31.50 points, equivalent to a 1.06% decline, bringing the benchmark index down to 2,922.63 on Wednesday. This follows a steeper drop of 47.93 points in the previous trading session, reflecting a cautious and bearish sentiment among investors.
Market Performance Overview
The trading day began with the index opening at 2,961.8 points, briefly climbing to an intraday high of 2,967.03, suggesting some early optimism in the market. However, this upward momentum was short-lived, as selling pressure gradually intensified throughout the day, driving the index down to an intraday low of 2,915.47 before settling slightly higher at closing.
Despite the index decline, the market witnessed robust trading activity. A total of 36,871,244 shares were traded, amounting to a total turnover of Rs. 15.98 Arba. These transactions occurred across 318 listed companies, completed through 168,594 deals, indicating continued interest in equity investments, albeit with a risk-averse outlook.
The total market capitalization, a measure of the overall value of the listed companies, stood at Rs. 48.76 Kharba, while the float market capitalization was recorded at Rs. 16.55 Kharba. The shrinking index and market cap indicate erosion in investor wealth and portfolio values across sectors.
Sectoral Breakdown: Hotel and Tourism Hit Hard
Among the various sub-indices, the Hotel and Tourism sector was among the worst performers of the day. The sector’s index declined by 71.55 points, a 0.99% drop, settling at 7,091.82. This adds to the heavy loss of 154.39 points recorded in the previous trading session, reflecting sustained investor retreat from tourism-related stocks.
The sector index opened at 7,098.42 and briefly surged to an intraday high of 7,208.68, but persistent selling saw the index tumble to a day low of 7,062.30 before slightly rebounding at the close. This pattern mirrored the broader market trajectory, where initial gains were wiped out by midday pressure.
The continued decline in the Hotel and Tourism Index is particularly concerning given its historical performance and the renewed interest in the hospitality sector following the rebound in tourism post-COVID. Analysts suggest that profit-booking and broader macroeconomic uncertainties may be dampening investor confidence in this traditionally volatile segment.
Investor Sentiment and Market Trends
The twin sessions of losses suggest that the NEPSE is undergoing a correction phase, with investors choosing to exit positions amid concerns about overvaluation, regulatory uncertainty, and global economic pressures.
The relatively high turnover figure of nearly Rs. 16 Arba signals that trading volumes remain healthy, but the market’s inability to sustain intraday gains points to weakening momentum. Observers believe that unless the market finds strong technical or fundamental support soon, further declines could ensue in the short term.
Market analysts also cite the lack of positive domestic triggers, uncertainty over monetary policy direction, and the seasonal impact of the fiscal year closure as reasons for investor reluctance to take fresh positions. Additionally, the expectation of lower liquidity in the banking system could be leading institutional investors to adopt a cautious stance.
Technical Outlook and What Lies Ahead
From a technical analysis perspective, NEPSE has now slipped below a key psychological support level of 2,950, raising the possibility of further downside if selling continues. However, some analysts remain optimistic that the index might find support near the 2,900 level, which has historically acted as a bounce-back point.
For now, market participants are advised to exercise caution and closely monitor upcoming macroeconomic announcements, particularly from the Nepal Rastra Bank and Ministry of Finance, which may shape short-term sentiment. The quarterly earnings season could also bring some stock-specific momentum, especially in the banking, insurance, and hydropower sectors.
The Nepal Stock Exchange continues to face volatility, with back-to-back sessions of losses eroding recent gains. While trading activity remains strong, investor sentiment appears fragile amid broader economic uncertainties. The sharp fall in the Hotel and Tourism sector further underscores the nervousness in the market, and unless fresh positive cues emerge, NEPSE could remain under pressure in the coming days.
Long-term investors, however, might find this a good opportunity to accumulate quality stocks at discounted prices, provided they have a high-risk tolerance and a clear investment horizon. For the immediate term, all eyes remain on how the index behaves around the critical 2,900 mark.
