NEPSE Index Gains Over 57 Points in Two Days in Pre-Election Rally, Signaling Positive Sentiment

The Nepal Stock Exchange (NEPSE) index showed strong momentum with a gain of 57.79 points in just two trading day of the week before the March 5 elections, indicating improved investor sentiment.

Analysts have attributed this surge to “pre-election rally” characterised by a notable increase in liquidity and valuation compared to the previous week.   

This week, the market climbed 57.79 points closing at 2712.49 points. The market gained over 350 percent compared to the previous week when the index gained 12.77 points closing at 2654.93 points.

Average daily turnover rose from Rs 4.93 billion last week to 5.94 billion this week, an increase of 20.5 percent, indicating high conviction among buyers.

On March 3, the last trading day of the week before the polls, turnover stood at Rs 6.23 billion, an increase of 49.40 percent compared to Rs 4.17 billion at the end of last week.

The market capitalization also grew from Rs 4.444 trillion at the end of last week to Rs 4.563 trillion. In just two sessions, investors’ paper wealth increased by Rs 119 billion.

Investor Narendra Bhurtel expressed optimism about the market’s outlook post-elections. He said the surge in the last two trading days indicates positive momentums in the coming days. Since major political parties have prioritised capital market reforms in their election manifestos, he believes the market may see positive developments ahead.

Chartered accountant and stock market analyst Manish Aryal described the recent upswing as a “pre-election rally”. However, he cautioned that for a sustainable growth, daily turnover needs to consistently exceed Rs 10 billion for at least a week.

He attributed the recent rise in volume to increased activities in the banking sector, which had previously remained sluggish.

“I closely observed the last two trading days where the banking sector, which had previously remained sluggish, recorded higher volume, thus pushing both valuation and turnover upward. If this sector continues to go up with high volume, the market could continue its upward trend” he said.

He also expressed optimism about the market’s growth post-polls.  

Stock market analyst Ajay Singh Thapa, popularly known as “Jay Sambhoo” connected the recent rally to the market-friendly approach adopted by major political parties in their poll manifestos.

“Unlike previous elections, political have highly accorded priority to the capital market in their manifestos. If any party secures majority, the market could continue its upward movement. But, for sustainable growth, the market needs a daily turnover of over Rs 12-15 billion,” he said.
He cited past market trends where the market failed to sustain levels above 3000 points despite daily turnover reaching above Rs 25 billion.

Through a technical perspective, the market has closed above the psychological 2700 level. Analysts considered this as a positive signal. The 2700 mark serves as psychological barriers. Following the recent surge, peaking at 2772.17, short-term traders appear to have used the 2700 level as profit-booking point.