NEPSE Falls as Risk Spreads Beyond Hydropower

Markets Today

NEPSE closed at 2,513.42, down 43.89 points (‑1.71%), the largest single-day decline of this entire coverage period exceeding Wednesday's flood crash of 35.92 points. The index is now at its lowest level of the stretch and has fallen through 2,550, 2,530 and 2,520 without pausing at any of them.

Breadth returned to catastrophe levels: 21 advanced against 253 declined, 8 unchanged, 347 scripts traded. An A/D of 0.08, a new record low undercutting Wednesday's 0.09. Only 21 stocks on the entire exchange closed higher.

Thursday's session breadth of 1.24, Manufacturing up 1.75% on eight names, the first broad sector move of the coverage is gone. That recovery lasted exactly one session, as every prior above-parity reading in this coverage has.

Every sector closed red except Manufacturing & Processing (+0.70%).

What changed

Wednesday's crash was a physical event: the Bhotekoshi flood took 430 MW offline and the market sold the named plants. Today is different, and worse. ICRA Nepal placed Myagdi Hydropower on "Watch with Negative Implications" and cut its issuer rating to [ICRANP-IR] B@, a rating that explicitly indicates high risk of default on timely debt servicing after a landslide buried the powerhouse of its 14 MW Ghaar Khola project, submerging turbines and generators.

That is the first time in this sequence a rating agency has translated physical disaster damage into a credit action on a listed hydropower company. It establishes the template: damage → force majeure → insurance claim of unknown size → debt servicing risk → rating downgrade.

The market applied that template across the sector.

Hydropower fell 2.94%. RHPL still suspended at 111 MW fell another 11.76% to 165.90. CHCL fell 10.49% to 362.50. MKJC closed limit-down at ‑14.98%. MANDU ‑9.30%, SKHEL ‑7.07%, MEPDL ‑6.67%, MSHL ‑6.54%, SSHL ‑3.09%, GHL ‑3.04%, HDHPC ‑3.22%.

And Non-Life Insurance fell 5.03%, the worst sector on the board for a third consecutive session. NIL ‑6.16%, NLG ‑6.22%, SALICO ‑5.68%, NICL ‑5.72%, SICL ‑5.71%, SPIL ‑5.92%, SGIC ‑5.52%, IGI ‑4.81%, UAIL ‑4.50%, HEI ‑6.31%.

Across three sessions Non-Life is down roughly 10.6%. The chain now visible: eleven flood-damaged projects plus a landslide-buried powerhouse, all filing insurance claims of undetermined size, against a reinsurer (Himalayan Re) that reported a Rs 2.33 billion loss with its catastrophe reserve depleted to Rs 144.4 million. The insurance layer is being repriced for losses nobody has quantified yet.

Turnover fell 3.7% to Rs 3.65 arab. But transactions rose 29.6% to 68,137, the highest count of this entire coverage period while volume fell 12% to 93.22 lakh units. The average block deal size collapsed to Rs 53,605, by far the lowest recorded down 26% from Thursday.

Record transaction count, record-small tickets, record-worst breadth. That is a very large number of small holders getting out.

Index Snapshot

Turnover Rs 3.65 arab (‑3.7% DoD)
Volume 93.22 lakh units (‑12%)
Transactions 68,137 (+29.6%, highest of coverage)
Scripts traded 347
Advancers 21
Decliners 253
Unchanged 8

Sectoral Indices Performance

Non-Life Insurance at ‑5.03% is the worst single-sector session of this coverage, and it is the third consecutive day the sector has been the weakest on the board (‑3.90%, ‑2.04%, ‑5.03%). Not one name in the sector held up.

Hydropower at 3,437.13 has fallen 8.4% in four sessions from 3,750.98 on 20 August. The sector is now decisively below every level in this coverage.

Hotels & Tourism fell 2.44% and closed below 7,000 at 6,989.28, CITY ‑2.31%, BANDIPUR ‑2.75%, TRH ‑3.42%, SHL ‑2.28%, HFIN ‑2.55%. That sector had been quietly resilient through most of this stretch.

Manufacturing & Processing was the only green sector at +0.70%, and it is a second consecutive session of relative strength: GCIL +7.57%, PCIL +4.03%, SYPNL +3.91%, SARBTM +2.64%, SONA +2.18%, SHIVM +2.15%. Six names up and SHIVM again topped the turnover table.

But the sector's headline gain masks a significant casualty: SAPIL fell 8.52% (see below).

Market Breadth

A/D ratio 0.08, a new record low for the coverage.

The series: 0.32 → 0.51 → 0.99 → 0.70 → 1.66 → 0.67 → 0.35 → 0.32 → 0.79 → 1.01 → 0.36 → 0.21 → 0.42 → 0.09 → 1.24 → 0.08.

Sixteen sessions. Three readings above parity every one reversed within a single session. Two readings below 0.10, both in the last four sessions.

Technical scan as of 2:58 PM, two minutes before the close: 3,195 signals, 642 bullish (20.09%) against 1,255 bearish (39.28%).

Bullish share rose fractionally from Thursday's record-low 19.71% to 20.09%; bearish rose from 37.05% to 39.28%. The gap widened to 19.2 points. Total signals stayed depressed at 3,195.

The scan has now spent four consecutive sessions with bullish share between 19.7% and 20.3%, the lowest sustained band of the coverage by a wide margin. On Thursday when breadth flipped to 1.24, this report flagged that "the price action says recovery, the sentiment machinery says the fewest stocks are showing bullish setups than at any point in this coverage. One of the two is wrong."

The scan was right.

Winners & Losers

Top Gainers

Twenty-one stocks closed green out of 347 traded, and this table is essentially half of them. Six of the ten are Manufacturing & Processing.

GCIL rose 7.57% for a second consecutive session (+8.19% Thursday) and was sixth by volume up 16.4% across two sessions, and one of the very few names anywhere on this exchange holding a multi-session gain.

SHIVM topped the turnover table for a second straight session at +2.15% and PCIL, SONA, SARBTM and SYPNL all extended Thursday's gains. The Manufacturing rotation flagged on Thursday held, the only thing in this report that did.

ENL rose 2.62% after falling 8.38% Thursday.

Top Losers

Seven of the ten worst are hydropower.

RHPL is now down 45.4% in four sessions from 241.40 before the flood to 165.90 today. Generation remains suspended at the 111 MW Rasuwagadhi project, most structures damaged, employee status still unresolved and no restoration timeline published. It was again the second-highest volume stock on the exchange.

CHCL is down 28.8% across the same four sessions, closing 362.50 and was third by both volume and turnover.

MKJC closed limit-down at ‑14.98%, its second circuit-down in four sessions.

And SAPIL finally broke. After eleven consecutive limit-up sessions from a 345.00 debut to 1,394.80, a gain of 304% with not one red day, it fell 8.52% to 1,276.00 and was the second-largest turnover name on the exchange.

That is the twelfth-and-final entry on this coverage's failed-breakout list and the most extreme. Every single name that led this board on any day over sixteen sessions has now surrendered its move. There are no exceptions left.

Turnover & Volume Leaders

Most active by volume: SHIVM (664.00, +2.15%), RHPL (165.90, ‑11.76%), CHCL (362.50, ‑10.49%), RIDI (339.50, ‑1.85%), SONA (416.90, +2.18%), KBL (211.00, ‑0.47%), GCIL (398.00, +7.57%), SANIMA (359.00, ‑2.71%), AKJCL (336.90, ‑1.78%), API (322.20, ‑1.14%).

Seven of the ten turnover leaders are Manufacturing & Processing. On Wednesday, hydropower filled all ten slots in both tables. That is a complete sector rotation of the money in three sessions out of hydro, into manufacturing.

RIDI made another new low at 339.50. The full arc across the coverage: 386.00 → 377.00 → 375.00 → 371.00 → 367.90 → 361.60 → 359.60 → 364.80 → 359.90 → 357.00 → 351.90 → 343.00 → 345.90 → 339.50. Down 12.0%, and a top-ten turnover name throughout.

Bulk/block activity as of 2:59 PM, one minute before the close: Rs 3.29 arab across 61,382 blocks, average deal size Rs 53,605 by an enormous margin the lowest of this coverage, down from Thursday's Rs 72,393 and less than half of Tuesday's Rs 88,756.

The largest single block of the day was TAMOR at Rs 95.30 lakh under one crore. Every prior session in this coverage has had a largest block above Rs 1.47 crore, and most above Rs 3 crore. The top five totalled just Rs 3.43 crore: TAMOR (Rs 95.30 L), NRIC (Rs 71.40 L), UMHL (Rs 61.47 L), SONA (Rs 59.46 L), UMHL again (Rs 55.15 L). Top five by quantity: SFEF (100,000 / 61,026 / 50,000), SAGF (50,000 × 2).

This is the clearest institutional signal in the entire report. Large block activity has effectively stopped. After the ADBLB87 placements (~Rs 142 crore across three sessions), RSML's Rs 31.53 crore, MAKAR's Rs 7.45 crore and SBI's Rs 16.12 crore, the biggest ticket anyone would write today was Rs 95 lakh. Size has left the market entirely, and 68,137 retail transactions were left to clear the tape on their own.

Previous Session Recap: Thursday, 27 August

NEPSE closed at 2,557.31, down 1.04 points, with breadth flipping to 146 up / 118 down (A/D 1.24), the first above-parity reading since 20 August. Manufacturing & Processing rose 1.75% on eight names, the broadest sector move of the coverage. But flood names kept selling: RHPL ‑8.38%, CHCL ‑5.15%, and Non-Life Insurance fell 2.04% for a second day. Himalayan Reinsurance reported a Rs 2.33 billion loss with its catastrophe reserve down to Rs 144.4 million; margin lending data showed Rs 166.50 billion outstanding against share collateral. SBI printed four identical Rs 4.03 crore blocks. Bullish technical signals hit a record-low 19.71%.

Coverage context: the sixteen sessions from 7 to 31 August: 2,650.08 → 2,641.06 → 2,641.85 → 2,642.40 → 2,651.21 → 2,643.83 → 2,641.82 → 2,622.48 → 2,622.22 → 2,629.40 → 2,618.72 → 2,599.58 → 2,594.27 → 2,558.35 → 2,557.31 → 2,513.42. Net ‑136.66 points, ‑5.16%, with two-thirds of that decline arriving in the last four sessions.

Top Stories in Nepal

The credit event

ICRA Nepal has placed Myagdi Hydropower (MHL) on "Watch with Negative Implications" and revised its issuer rating to [ICRANP-IR] B@ indicating high risk of default in timely debt servicing after an 11 August landslide buried the powerhouse of its 14 MW Ghaar Khola project in Myagdi, submerging turbines and generators and forcing a complete suspension of generation.

Also placed under negative watch: NPR 2.315 billion of long-term loan limits at [ICRANP] LB@ and NPR 130 million of short-term limits at A4@.

MHL says other project structures remain intact. It has notified NEA under the force majeure provision of its PPA and formally initiated an insurance claim, though the extent of damage, losses and recovery period are still being assessed.

The context makes it worse. The project was commissioned in August 2023 at a cost of around NPR 3.058 billion, and even before the landslide it was generating only about 64% of its contracted energy in FY2025. MHL has NPR 926 million of paid-up capital, fully promoter-backed, and had been preparing to raise NPR 475 million through an IPO now in question.

ICRA says the credit profile stays under close monitoring until there is clarity on repair cost and timeline, and on how much insurance proceeds can cover lost revenue and repair costs. Recovery depends on restoration speed, insurance compensation, promoter support, and possible debt restructuring or loan rescheduling with lenders.

Why this moved the whole sector: it is the first formal credit action linking disaster damage to default risk on a listed Nepali hydropower company. Every flood-damaged project on NEA's list, RHPL among them now has a visible template for what comes next. And it lands in the same fortnight banks committed roughly Rs 115 billion to Tila-1 and Tila-2 project financing.

Flood aftermath widens

• The Rasuwagadhi–Kerung border crossing has been completely destroyed, and cargo is being diverted to Korala in Mustang. The APF checkpost in Jomsom logged 66 containers on Sunday evening alone. Mustang Customs collected Rs 6.92 billion in FY2025/26 and Rs 290 million in the first month of this fiscal year but operates with only 12 of 18 sanctioned staff. This is now a trade-route disruption, not just a power one: Rasuwagadhi was a primary Nepal–China corridor.

• The Muglin–Kathmandu highway is closed. Nepal Oil Corporation says fuel and LPG supplies to Kathmandu will continue via an alternative Makwanpur route.

• China has provided around Rs 336 million in cash assistance and emergency supplies, plus rescue personnel and equipment.

• Starlink has offered free satellite internet in flood-affected areas, subject to government approval.

• Relief contributions continue: Kamana Sewa Bikas Bank Rs 25 lakh, NAIMA Rs 5 million to the PM Disaster Relief Fund following Global IME's Rs 50 million and Kumari Bank's Rs 30 million last week.

Corporate

• NIFRA has proposed a 5.2632% cash dividend for FY2082/83, worth Rs 1.1369 billion, subject to regulatory and shareholder approval. NIFRA was one of only two green names in Investment today (+0.46%).

• MNMF1 declared a 2.20% cash dividend for FY2082/83; unitholders as of Bhadra 23 are eligible.

• ICRA Nepal removed Bhat-Bhateni from "Watch with Negative Implications" and reaffirmed its ratings, as store operations recover after the September 2025 unrest. Note the contrast with MHL on the same day, the agency is actively moving names in both directions.

• Himalayan Bank appointed Baikuntha Aryal as Chairman following Prachanda Bahadur Shrestha's resignation. HBL closed ‑1.01%.

• Madhesh Province registered 5,068 new industries in FY2025/26 while 1,938 closed or deregistered, amid economic slowdown, liquidity constraints and capital shortages.

Corporate Actions & Events

What to Watch

The MHL rating action is the most important development of this coverage period. It converts disaster damage into a quantified credit event on a listed hydropower company, and it names the four variables that now matter for every flood-affected name: reconstruction cost, insurance recovery, debt servicing capacity, and restart timeline. RHPL has none of those disclosed. Watch for ICRA or other agencies taking action on flood-affected listed names, that is the mechanism by which this becomes a banking-sector story rather than an equity one.

Non-Life Insurance is down roughly 10.6% in three sessions and has been the worst sector every one of them. Eleven flood-damaged projects plus a landslide-buried powerhouse are all filing claims of unquantified size, into a market whose reinsurer just reported a Rs 2.33 billion loss with Rs 144.4 million of catastrophe reserve. Nobody has published a loss estimate. Until someone does, this sector is being priced on fear rather than arithmetic which cuts both ways when the numbers arrive.

Institutional size has left completely. The largest block of the day was Rs 95.30 lakh, against Rs 4.03 crore on Thursday and Rs 10.15 crore during the ADBLB87 placements. Average deal size Rs 53,605, a record low. Meanwhile transactions hit a record 68,137. Large accounts are not participating at all and 68,000 small trades cleared the market down 1.71%. Watch for the first block above Rs 2 crore that would be the earliest credible sign that size is willing to price this market again.

Manufacturing & Processing is the only thing working, and it has now held two consecutive sessions. GCIL +16.4% across two days, SHIVM topping turnover twice, seven of ten turnover leaders from the sector. In sixteen sessions no rotation has survived two days. This one has. Whether it survives a third with the index down 5.16% over the coverage and the A/D at 0.08, is the single most tradeable question on the board.

SAPIL's eleven-session, 304% run ended at ‑8.52%. With that, every name that has led this board on any day of this coverage has surrendered its move. Twelve failed breakouts, no survivors. The pattern is now unbroken across sixteen sessions.

A/D of 0.08 with a record transaction count and record-small tickets. Wednesday's crash had record volume, a capitulation signature. Today had record transactions on falling volume, which is a different thing: it is a large number of small holders exiting rather than a few large ones. Panics that come from the small end tend to run longer than those from the large end, because there is no single decision-maker to stop.

2,513.42 with no tested support below. The index has broken through 2,550, 2,530 and 2,520 in one session without pausing. There is no level in this coverage period below here and the round number at 2,500 is 13 points away.