How Seasonal Trends Affect NEPSE: Is There a Dashain Rally?

Introduction: Is There Really a Dashain Rally in NEPSE?

If you’ve been part of Nepal’s stock market for a while, you’ve likely heard the phrase:
“Dashain aauda NEPSE badchha.”
But is this just anecdotal chatter, or is there data to back the belief that NEPSE rallies during Dashain?

In many global markets, seasonal effects—such as the “Santa Claus Rally” or “January Effect”—are well documented. Similarly, Nepali investors speculate about a “Dashain Rally,” with claims that investor optimism and liquidity during the festive season lead to higher stock prices.

This blog analyzes seasonal patterns, fiscal trends, and investor behavior to answer the question:
👉 Does NEPSE really follow a Dashain rally trend?

1. Understanding Seasonality in Stock Markets

Seasonality refers to repeating patterns in stock prices due to calendar events, such as:

• Festivals or holidays

• Tax deadlines

• Fiscal year closings

• Budget announcements

• Corporate dividend season

In Nepal, these periods include:

• Dashain & Tihar (Sept–Nov)

• Fiscal year-end (Mid-July)

• Monsoon season (June–August)

• Budget release (May/June)

These events can influence investor mood, institutional liquidity, and even sector rotation.

2. The Dashain Rally: Myth or Market Behavior?

🔍 What is the Dashain Rally?

The Dashain Rally is the belief that NEPSE experiences a bullish run in the weeks leading to Nepal’s biggest festival—Dashain—as people invest their festival bonuses, markets reflect positive sentiment, and investors expect bonus/right shares.

📊 Does the Data Support It?

Historically, some years (e.g., 2017, 2020) have shown notable upswings around Dashain. However, others (e.g., 2022) have seen corrections during the same time.

So, what drives this belief?

3. Key Factors Behind the Dashain Effect

a) Inflow of Festival Bonus and Remittance

Many salaried individuals receive Dashain bonuses in September/October. Additionally, remittances spike before the festival. A portion of this capital may enter the market, especially among short-term retail traders.

b) Positive Investor Sentiment

The festive environment breeds optimism. Nepalis feel wealthier during Dashain—and that optimism spills into the market.

c) Less Negative News

During Dashain, government activity slows, regulations pause, and fewer corporate disruptions occur. This lower volatility often supports a short-term upward drift in prices.

d) Speculative Trading Picks Up

Since companies often announce bonus/right shares in Q1 (Shrawan–Asoj), traders anticipate announcements, particularly before Dashain holidays.

4. Other Seasonal Trends in NEPSE

The Dashain rally is just one of several patterns. Here are others worth noting:

a) Tihar and Laxmi Puja (Festival of Wealth)

During Laxmi Puja, many investors symbolically buy shares as a sign of prosperity. It creates a one-day sentiment-driven volume spike, especially in stocks like NABIL, NLIC, and NTC.

b) End of Fiscal Year (Ashad Month – July)

• Portfolio reshuffling by institutions

• Last-minute dividend announcements

• Pressure on financial stocks to publish results
  This often causes increased volatility, both up and down.

c) Post-Budget Rally (Jestha/Asar)

When the government announces pro-business budgets (e.g., tax reductions, capital market reform), investors react positively. Certain sectors—like hydropower, insurance, or manufacturing—may see short rallies.

d) Monsoon Doldrums (June–August)

This is often a quiet season. Poor roads, weather disruption, and lack of liquidity can lead to lower volumes and sideways trends.

5. Which Sectors Benefit During Dashain?

Not all sectors respond equally. Here’s a quick look at which ones tend to show relative strength:

6. Should You Invest During Dashain? Pros & Cons

✅ Pros:

• Sentiment is positive

• Bonus announcements may drive prices

• Lower volatility during holidays

• Opportunity to enter early if a rally begins

❌ Cons:

• Over-optimism can lead to poor entry timing

• Market liquidity may dry up during holidays

• Operators may use the period to trap retail traders

• Stocks may correct post-festival

7. Dashain Rally vs. Fundamentals

While seasonal trends can provide opportunities, no rally is guaranteed. Investing based only on the calendar—without considering company earnings, valuation, or economic indicators—is risky.

Case in point: In 2022, NEPSE fell sharply before Dashain despite expectations. Why? Rising interest rates, tight liquidity, and no clear corporate catalysts.

Always analyze the macroeconomic environment and market sentiment, not just the time of year.

8. Trading Strategy for Dashain Season

Here’s how to approach the Dashain period wisely:

🔎 Watch Volume and Broker Activity
– If volume is rising and broker concentration is low, the rally may be broad-based.

📊 Focus on Fundamentals
– Choose companies with real earnings momentum or upcoming dividends.

📈 Avoid FOMO Trades
– Don’t enter a stock just because it’s trending before Dashain.

📅 Set Time-Stop Trades
– If you're trading seasonally, decide your exit BEFORE the holidays begin.

💼 Consider Mutual Funds
– They may provide diversified exposure without the timing risks of individual stocks.

9. Investor Psychology: Festivals and Optimism

Festivals often make people feel wealthier, happier, and more willing to take risks. This emotional uplift leads to:

• More speculative buying

• Less rational decision-making

• Herd mentality behavior

Understanding this psychology helps you stay grounded—especially when social media is full of “stock picks for Dashain.”

10. Final Take: Is There Really a Dashain Rally?

There isn’t a guaranteed Dashain rally—but there is seasonal optimism that often leads to increased activity. In bullish years with strong liquidity, the Dashain period tends to see a bounce.

But in bearish years with high interest rates or poor macro signals, even the festive season can’t save the market from correction.

Conclusion: Don’t Trade the Calendar—Trade the Trend

The idea of a Dashain Rally is part tradition, part truth. While the festive period may bring optimism and temporary momentum, wise investors don’t blindly follow seasonal patterns.

📌 Use the season as a sentiment indicator, not a trading strategy.
📌 Combine it with solid technical and fundamental analysis.
📌 Remember: In NEPSE, the smartest money doesn’t follow the calendar—it follows the data.