Festival Spending vs. Stock Investing: Where Does the Money Go in Nepal?
During Dashain and Tihar, Nepalis spend billions on gold, travel, and shopping. But does this spending take money away from NEPSE, or can festivals also boost investment in stocks? This blog explores the tug-of-war between festival consumption and stock market investing.
Introduction
Every Dashain and Tihar, Nepalis face a familiar choice: spend on celebrations or set aside money for investments.
From gold jewelry to luxury travel, festival expenses often soar — raising the question: does this heavy spending weaken NEPSE by draining liquidity, or does remittance-driven optimism actually support the market?
1. The Scale of Festival Spending in Nepal
Consumer Goods: Clothing, electronics, and household items dominate Dashain shopping.
Gold & Jewelry: Gold imports surge every Dashain, pulling billions of rupees out of banks.
Travel & Hospitality: Bus and airline bookings rise sharply, benefiting the tourism economy.
Debt Payments: Many families use bonuses or remittance to settle loans.
In 2024, Nepal’s import of gold and luxury goods spiked by over 20% in September–October, reflecting festival demand.
2. How Spending Affects NEPSE Liquidity
Liquidity Drain: Money spent on imports leaves the banking system, raising CD ratios.
Opportunity Cost: Families divert savings away from stocks to cover festival expenses.
Short Trading Weeks: With fewer trading days, NEPSE volume naturally drops.
This explains why some years — like 2076 B.S. and 2080 B.S. — NEPSE stayed weak despite festival optimism.
3. The Counterbalance: Remittance & Bonus Payouts
On the flip side, liquidity also improves during Dashain–Tihar:
Remittance Inflows: Migrant workers send extra money home.
Salary & Bonus Payments: Dashain allowances provide temporary cash flow.
Optimism Factor: Some households allocate part of festival inflows into stocks.
This “push–pull” dynamic determines whether NEPSE rallies or stalls during the holidays.
4. Behavioral Finance Angle
Spend Now, Invest Later: Many retail investors postpone buying stocks until after festivals.
Festival Optimism: Traders may speculate on short rallies before long holidays.
Risk Aversion: Families prioritize consumption security (gold, goods) over volatile assets (stocks).
5. Case Study: Dashain–Tihar 2077 vs. 2080 B.S.
2077 B.S.: Despite high spending, strong remittance inflows supported a modest NEPSE rise.
2080 B.S.: Policy uncertainty and high spending pulled liquidity out, leaving NEPSE flat.
Lesson: Festival outcomes are shaped by the balance between spending drains and liquidity injections.
6. Investor Strategies in Festival Season
✅ Balance Consumption & Investment: Don’t empty savings for short-term spending.
✅ Track Gold Imports: High gold imports often signal liquidity pressure on NEPSE.
✅ Watch Remittance Trends: If inflows are strong, stock liquidity may hold.
✅ Use Post-Festival Windows: After holidays, liquidity often normalizes — a good entry point.
✅ Diversify: Spread funds between consumption security (gold, savings) and growth assets (stocks).
7. Outlook for Dashain–Tihar 2025
Drivers of Spending: Inflation in goods, rising gold demand, tourism recovery.
Drivers of Liquidity: Record remittances, stable NRB policy, IPO momentum.
If spending rises too sharply, NEPSE may face short-term liquidity strain. But if remittances offset spending, investors could see stable or modest gains.
Conclusion
Dashain and Tihar create a fascinating paradox: they drain liquidity through massive consumer spending yet inject liquidity through remittances and bonuses.
For NEPSE investors, the message is clear: don’t just track prices — track where the money is flowing. Understanding the balance between spending and investing during festivals can give you an edge in 2025.