NEPSE Witnesses Weekly Correction Amid Shrinking Turnover; Manufacturing Sector Stands as Lone Gainer

The Nepal Stock Exchange (NEPSE) concluded the trading week on a bearish note, succumbing to selling pressure that erased gains from the prior week. The benchmark NEPSE index shed 21.92 points, or 0.80%, to close at 2,702.11. The market, which was open for five trading sessions, experienced a tug-of-war between bulls and bears, ultimately seeing three days of decline against two days of marginal gains, indicating a cautious investor sentiment prevailing throughout the week. This downturn was also reflected in the key indices, with the Sensitive Index falling by 3.11 points and the Float Index decreasing by 1.22 points.

A significant concern for market participants was the noticeable contraction in market liquidity. The daily average turnover plummeted by 13.11% compared to the previous week, settling at Rs. 4.09 billion from a more robust Rs. 4.61 billion. This decline in trading activity was further evidenced by a 3% drop in the daily average number of shares traded and a more substantial 12.66% fall in the daily average number of transactions. Consequently, the total market capitalization of NEPSE eroded by Rs. 37 billion, contracting to Rs. 46.17 trillion. This reduction in both price and volume suggests a period of profit-booking and a 'wait-and-see' approach from investors.

The sectoral performance painted a clear picture of a broad-based market retreat. Out of the thirteen sub-indices, twelve ended the week in the red. The Manufacturing and Processing sub-index was the solitary beacon of hope, bucking the negative trend to post a gain of 68.05 points and close at 11,063.62. On the other end of the spectrum, the 'Others' sub-index registered the steepest percentage decline, falling by 3.10%. In terms of absolute points, the Non-Life Insurance sub-index was the hardest hit, plummeting by a substantial 282.92 points to close at 11,069.84, signaling significant selling pressure within the sector.

Despite the overall market downturn, several individual stocks delivered extraordinary returns. Apolo Hydropower was the week's undisputed star, with its share price skyrocketing by an astonishing 101.05%, closing at Rs. 916 from a previous close of Rs. 455.60. Sopan Pharmaceuticals also saw a remarkable surge of nearly 99.5%. Conversely, Green Development Bank was the week's top loser, with its value depreciating by 11.51%. In other market news, a total of 20.9 million new shares were listed on the exchange from three companies: right shares of Narayani Development Bank and IPO shares of Yambaling Hydropower and Taksar Pikhuwa Khola Hydropower, adding to the market's total supply.

In a significant off-market development that could influence future sentiment, the leadership vacuum at NEPSE has finally been filled. The Ministry of Finance appointed Joint Secretary Amrit Lamsal as the new Chairman of the Nepal Stock Exchange, a position that had been vacant for a month and a half. This move is expected to bring stability and clear direction to the exchange's operations. As a new week begins, investors will be closely watching whether this leadership appointment can instill renewed confidence and if the market can reverse its downward trajectory and recover its trading volumes.