NEPSE’s Selling Surge Explained: Beyond Price Movement

If you follow NEPSE closely, you’ve probably noticed a frustrating pattern: whenever share prices don’t move much for 3–4 days, selling suddenly picks up, often leading to a market dip. It’s not always about bad news or fundamental problems. So why does this happen?

Here’s what I’ve observed over the years trading and watching NEPSE closely—this behavior comes down to a mix of credit-driven trading, short-term mindset, and some unique local habits.

Credit Is the Hidden Driver

Many traders in NEPSE buy shares using broker credit or exposure that lasts only 72 hours or so. This means they’re not using their own money fully but relying on short-term loans from brokers. If prices don’t go up fast enough within this window, these traders get nervous and rush to sell to avoid interest or forced liquidation.

So flat prices aren’t just boring—they create pressure. Traders are thinking:

“If the price doesn’t rise soon, I won’t be able to repay my dues.”

That’s when selling starts piling up.

We’re Mostly Short-Term Players

Unlike developed markets with big institutional investors playing for the long haul, NEPSE is dominated by retail traders. Most of us are looking for quick wins, chasing momentum rather than valuing companies over time.

When the market pauses, that momentum seems to vanish. The immediate reaction is to sell before the price turns down. This herd mentality spreads quickly—when some sell, others follow.

Fear of Getting Trapped

Nepalese investors have seen sharp crashes and long sideways phases in the past. Many have experienced the frustration of holding shares for months or years without decent returns.

Because of that, many prefer to exit at the first sign of stagnation. The thought is:
“Better to book my money now and wait for a better opportunity than get stuck.”

This fear creates selling pressure even without any fundamental reason.

Fake Liquidity and No Safety Net

A big problem is that much of the NEPSE’s daily volume comes from borrowed money, not fresh cash. So when prices stall, many credit traders pull out simultaneously. But there aren’t enough genuine buyers to keep the market steady.

Also, we don’t have enough strong institutional investors or mutual funds to absorb selling pressure during these pauses. That’s why even minor selling can cause noticeable price drops.

Technical Signals and Social Media Buzz

In Nepal, many traders rely heavily on technical charts and tips from social media groups. When charts show a few flat days, it’s often interpreted as a sell signal, causing more people to exit.

The crowd moves together based on the same signals and narratives, which amplifies the selling during price stagnation.

The Cultural Preference for Land

Another important factor often overlooked is our cultural preference for land and real estate. For many Nepalese, land feels more secure than stocks, especially when the market isn’t moving.

So when share prices stagnate, investors often choose to liquidate and park their money in land or housing projects—something tangible they can see and feel.

Time Pressure from Settlement Cycles

While NEPSE officially operates on a T+2 settlement system, in practice many brokers expect their clients to clear dues much faster, sometimes within 48–72 hours. This creates a strong time pressure to sell if the price doesn’t move quickly.

Final Thoughts

In more mature markets, a few days of flat prices often mean the market is just resting and preparing for the next move. But in NEPSE, flatness causes stress because of credit-driven trading, impatience, fear, and cultural habits.

Until we develop stronger institutions, regulate credit more strictly, and cultivate a long-term investment mindset, expect these short-term selling bursts to continue.

Flat charts don’t mean calm—they mean pressure. And in Nepal’s market, pressure often leads to selling.

Article By: Rahul Sahewala