NEPSE Splits in Two as Flood-Damaged Stocks Keep Falling

Markets Today

NEPSE closed at 2,557.31, down 1.04 points (‑0.04%) effectively unchanged after Wednesday's 35.92-point collapse. The index found a floor. What happened underneath it is more interesting than the headline.

Breadth flipped decisively green: 146 advanced against 118 declined, 18 unchanged, 348 scripts traded. An A/D of 1.24, the first reading above parity since 20 August, and a violent reversal from Wednesday's record-worst 0.09. That is a swing from eleven decliners per advancer to more advancers than decliners in a single session.

Eight of thirteen sectors closed green. Manufacturing & Processing led at +1.75% on genuinely broad internals: GCIL +8.19%, SONA +5.05%, PCIL +4.53%, SHIVM +4.17%, SOPL +3.98%, SARBTM +1.80%, SYPNL +1.99%, RSML +0.81%. That is eight names in one sector moving together, the widest sector participation in this coverage period.

Banking (+0.14%), Development Bank (+0.44%), Finance (+0.66%), Hotels & Tourism (+0.41%), Microfinance (+0.12%) and Investment (+0.15%) all closed higher.

But the flood damage kept getting sold. Hydropower fell 0.55% for a second consecutive session, and the names on NEA's damage list took another leg down: RHPL ‑8.38% (188.00), CHCL ‑5.15% (405.00), TVCL ‑9.23%, MMKJL ‑8.00%, MKJC ‑7.75%. RHPL is now down 27.1% in two sessions from 241.40 pre-flood, and it was again the highest-volume stock on the exchange.

Non-Life Insurance fell 2.04% for a second day, the worst sector again. SGIC ‑4.05%, SICL ‑3.95%, HEI ‑2.99%, NICL ‑2.81%, NLG ‑2.64%, IGI ‑2.51%, SPIL ‑2.34%, UAIL ‑2.11%. Combined with Wednesday's ‑3.90%, the sector is down 5.9% in two sessions.

The market has split cleanly: everything unconnected to the Bhotekoshi is recovering, everything connected to it is still being sold.

Turnover fell 20.5% to Rs 3.79 arab. Volume fell 22% to 1.06 crore units. Transactions fell 14.4% to 52,575. All well down from Wednesday's records but still above the levels of early this week.

Index Snapshot

Turnover Rs 3.79 arab (‑20.5% DoD)
Volume 1.06 crore units (‑22%)
Transactions 52,575 (‑14.4%)
Scripts traded 348
Advancers 146
Decliners 118
Unchanged 18

Sensitive fell 0.12% against NEPSE's 0.04% large caps underperformed slightly, consistent with a session where the recovery came from mid-cap manufacturing rather than the index heavyweights.

Sectoral Indices Performance

Manufacturing & Processing at +1.75% is the strongest sector reading of this entire coverage period, and it is not one name. Eight of the sector's constituents rose meaningfully. This is the first genuinely broad sector move in a fortnight every previous "best sector" in this report has traced back to one or two stocks with block trades behind them.

Non-Life Insurance at ‑2.04% is the flood's second-order trade continuing. Yesterday's report noted the sector was sold hard on day one with no loss estimate available and that when actual claims figures emerged the ‑3.90% would look either conservative or excessive. Today it fell another 2.04%, the market is marking it down further not reversing.

The reason arrived after the bell (see news): Himalayan Reinsurance reported a Rs 2.33 billion loss with its catastrophe reserve down to Rs 144.4 million.

Hydropower at ‑0.55% has now fallen 5.8% in three sessions and closed at 3,541.50, the low of this coverage. But the internals are no longer uniform: RIDI +0.85%, AKJCL +1.48%, NHPC +1.84%, LEC +1.87%, KKHC +0.79%, TAMOR +0.42%, SSHL +0.47%, AKPL +1.24% all closed green. The selling has narrowed to the specific damaged assets rather than the whole sector.

Market Breadth

A/D ratio 1.24. 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.

This is only the third reading above parity in fifteen sessions. The previous two: 1.66 on 13 August and 1.01 on 20 August were both reversed within one session. That is the test this bounce faces tomorrow.

Technical scan as of 2:58 PM, two minutes before the close: 3,368 signals, 664 bullish (19.71%) against 1,248 bearish (37.05%).

Bullish share at 19.71% is a new record low for the coverage, breaking below 20% for the first time and undercutting yesterday's 20.27%. Bearish share fell to 37.05% from 41.67% narrowing the gap to 17.3 points from yesterday's record-wide 21.4.

So the scan improved on the bearish side but deteriorated to a fresh low on the bullish side, on a day breadth flipped strongly positive. Total signals remained depressed at 3,368.

That divergence is worth flagging clearly: the price action says recovery, the sentiment machinery says the fewest stocks are showing bullish technical setups than at any point in this coverage. One of the two is wrong.

Winners & Losers

Top Gainers

Six of the top ten are Manufacturing & Processing. That concentration in a single sector, on a day the sector rose 1.75%, is the clearest rotation signal this report has recorded. Money leaving hydropower is going somewhere identifiable for the first time.

SHIVM was the day's largest turnover name at +4.17%, the first time in this coverage that a Manufacturing stock has topped the turnover table. It also appeared fifth by volume.

SAPIL closed limit-up for an eleventh consecutive session at 1,394.80. From its 345.00 debut: +304% in eleven sessions, no red day, on volumes in the low hundreds of units. It has now quadrupled. SEBON issued a broad investor-protection package yesterday; this is the sort of thing it will need to address.

SAPDBL at +3.75% is notable, it fell 3.92% on Monday and was among the worst performers repeatedly last week. Development Bank closed +0.44%.

Top Losers

Nine of the ten worst are hydropower and five are second-day flood casualties.

RHPL is the centre of it. RHPL confirmed today that it has suspended all generation at the 111 MW Rasuwagadhi project, and said the status of most employees at the plant remains unknown. The stock fell another 8.38% to 188.00, after Wednesday's ‑15.00% limit-down. Down 27.1% in two sessions, and it was again the single highest-volume stock on the exchange.

CHCL fell another 5.15% to 405.00, down 14.7% in two sessions and was third by both volume and turnover.

UHEWA is the day's sharpest reversal and it was entirely predictable. Yesterday's report flagged it as "the day's genuine puzzle", it rose 10.43% while its sector fell 2.84% and six peers went limit-down, and the note was that it was worth watching today. It fell 9.45% giving back the entire move. Whatever that was a cover, a misread it did not survive one session.

That is failed breakout number fourteen. HATHY, which had three consecutive gains, is also gone. Across fifteen sessions, the only names holding multi-session advances are SAPIL (a listing artifact) and the Manufacturing complex that just started today.

MAKAR fell 5.87% down a second session after Tuesday's block-driven +4.80%. As flagged, that Rs 7.45 crore of block accumulation has produced nothing.

Turnover & Volume Leaders

Most active by volume: RHPL (188.00, ‑8.38%), SBI (400.00, +0.25%), CHCL (405.00, ‑5.15%), AKJCL (343.00, +1.48%), SHIVM (650.00, +4.17%), RIDI (345.90, +0.85%), GBIME (242.00, ‑0.45%), KBL (212.00, ‑0.24%), NHPC (254.60, +1.84%), API (325.90, ‑0.49%).

Six of the ten turnover leaders closed green against zero on Wednesday, when hydropower filled every slot in both tables and all ten were red. The composition has broken open: Manufacturing, Banking and Hydropower all represented.

RIDI finally closed up. After eleven declines in twelve sessions 386.00 down to 343.00, it rose 0.85% to 345.90. First green close since 20 August.

SBI is the day's institutional story. Nepal SBI Bank was second by both volume and turnover, closed +0.25%, and accounted for four of the five largest blocks on the exchange Rs 4.03 crore each, totalling Rs 16.12 crore, the largest printing at 11:01:59 AM.

Four identical Rs 4.03 crore tranches in a single commercial bank is the ADBLB87 pattern from earlier this month: a structured placement or portfolio transfer, not organic market activity. It is also the first time in this coverage that a commercial bank has dominated the block tape.

Bulk/block activity as of 2:59 PM, one minute before the close: Rs 3.42 arab across 47,251 blocks, average deal size Rs 72,393, down 6.8% from Wednesday. Largest single block: SBI at Rs 4.03 crore, 11:01:59 AM. Top five totalled Rs 17.78 crore, the highest block concentration since the ADBLB87 placements comprising SBI four times at Rs 4.03 crore each and BHCL at Rs 1.66 crore. Top five by quantity: SEF (122,100) and PSF (100,000 × 4).

Again, note what is absent: not a single flood-affected hydropower name in the top five blocks for a second consecutive session. Institutional size has been entirely out of hydro since the flood hit. Retail volume is doing all the trading in RHPL and CHCL on the way down.

Previous Session Recap: Wednesday, 26 August

NEPSE fell 35.92 points (‑1.38%) to 2,558.35, the largest decline of the coverage after flooding along the Bhotekoshi corridor took roughly 430 MW offline. Breadth collapsed to 23 up / 252 down, an A/D of 0.09, with six hydropower names at or beyond ‑10%: RHPL limit-down at ‑15.00%, MKJC ‑14.99%, TVCL ‑12.95%, MMKJL ‑11.56%, SJCL ‑11.18%, SPHL ‑10.00%, CHCL ‑10.12%. Every sector closed red. Volume hit 1.36 crore units and transactions 61,442, both coverage records, the first genuine capitulation of the stretch. Non-Life Insurance fell 3.90%.

Coverage context: the fifteen sessions from 7 to 27 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. Net ‑92.77 points, ‑3.50%.

Top Stories in Nepal

The reinsurance problem

Himalayan Reinsurance (HRL) swung to a Rs 2.33 billion net loss in FY2082/83 against a Rs 1.39 billion profit the prior year. Annualised EPS fell to negative Rs 21.50 from positive Rs 12.79. Retained earnings turned negative at Rs 3.28 billion; net worth per share is Rs 115.58 on unchanged paid-up capital of Rs 1.09 billion.

The mechanics: total income fell 9.37% to Rs 7.05 billion while total expenses rose 80.96% to Rs 10.45 billion. Net earned premium fell 5.69% to Rs 6.02 billion, claims paid rose 33.64% to Rs 3.45 billion, and investment income fell 27.30%.

And the line that matters most this week: HRL's catastrophe reserve fell 27.08% to Rs 144.4 million.

Nepal's reinsurer has reported a Rs 2.33 billion loss and depleted its catastrophe reserve to Rs 144 million in the same week a flood destroyed eleven hydropower projects, a 220 kV substation and nine bank branches. Primary insurers cede catastrophe risk to reinsurers; if the reinsurance layer is impaired, more of the loss stays with the primaries. That is a coherent explanation for why Non-Life Insurance has now fallen 5.9% across two sessions while the rest of the market recovered. HRL itself closed ‑2.11%.

Margin lending

Margin loans against share collateral rose 18.34% in FY2082/83 to Rs 166.50 billion, per NRB's 12-month data — up Rs 25.81 billion from Rs 140.70 billion. Total banking sector credit grew just 6.48%, so margin lending grew nearly three times faster than overall credit.

The concentration is stark. Loans above Rs 1 crore rose 20.75% to Rs 119.45 billion about 72% of all margin lending. Loans above Rs 50 lakh total Rs 138.61 billion, roughly 83% of the book. Loans between Rs 50 lakh and Rs 1 crore rose 19.49% to Rs 19.15 billion; Rs 25–50 lakh rose 7.34% to Rs 18.85 billion below Rs 25 lakh rose 10.59% to Rs 9.04 billion.

Over two years margin lending has grown from Rs 90.09 billion (Asar 2081) to Rs 166.50 billion more than Rs 76.42 billion added. The pace has moderated sharply from 56.17% growth in FY2081/82 to 18.34% now.

Read this against the tape. The index is down 3.50% in fifteen sessions and fell 1.38% on Wednesday alone. There is Rs 166.5 billion of credit outstanding against share collateral, 83% of it in large accounts. Falling collateral values raise risk for both borrowers and the banks holding the shares. This is the mechanism by which a market decline becomes a banking-sector issue and it is worth watching alongside NRB's Rs 85 billion liquidity withdrawal announced last week.

Flood aftermath

• Rasuwagadhi Hydropower has suspended all generation at its 111 MW project. RHPL said the flood on Bhadra 10 caused significant damage to the dam site, residential facilities and most of the project's structures, located in Gosainkunda Rural Municipality, Rasuwa. The company described it as an unprecedented and uncontrollable event said full damage extent cannot yet be determined, and confirmed the status of most employees at the plant remains unknown. Further assessment of dam, powerhouse and transmission infrastructure is pending.

• Power supply restored in flood-hit areas of Nuwakot. NEA has re-energised several affected areas via an alternative supply route from Sindhupalchok. First restoration progress since the flood.

• Kumari Bank contributed Rs 30 million to the PM Disaster Relief Fund, plus equipment worth Rs 3.9 million for rescue and relief.

• Global IME Bank pledged Rs 50 million to the same fund. Both banks had branches in the affected Timure area.

Market structure and macro

• Nepal Capital Market Discourse 2026 begins September 6, inaugurated by SEBON Chairman Dr. Gopal Bhatt, covering policy, regulation, financial literacy and technology. Follows yesterday's broad SEBON directive package.

• Nepal's remittances reached Rs 2.36 trillion in FY2025/26, up 37.1% surpassing the country's entire Rs 1.964 trillion annual budget. Remittance inflows are the primary source of the deposit liquidity that funds both bank lending and retail market participation.

• Sunrise Focused Equity Fund set Bhadra 18 as book closure for a 4.5% cash dividend for FY2082/83.

• Airlines maintaining government-approved fares amid a demand surge per the Airlines Operators Association; cheaper ticket categories have sold out.

Corporate Actions & Events

What to Watch

The market has split into two markets, and that is the single most useful thing to trade off right now. Everything connected to the Bhotekoshi: RHPL, CHCL, TVCL, MMKJL, MKJC, and the entire Non-Life Insurance complex is still being sold hard on day two. Everything else recovered, with Manufacturing & Processing up 1.75% on eight names. Those are two different markets with two different drivers, and conflating them via the index number will mislead.

Non-Life Insurance is not finished. Down 5.9% in two sessions with no claims estimate yet published, and now with the country's reinsurer reporting a Rs 2.33 billion loss and a catastrophe reserve of just Rs 144.4 million. When actual flood claims are quantified, the question becomes how much stays with primary insurers because the reinsurance layer is impaired. That is a sector-level solvency question not a sentiment one.

RHPL's disclosure is worse than the price action implies. Generation suspended indefinitely at 111 MW, most structures damaged, employee status unknown, full assessment impossible. The stock is down 27.1% in two sessions but there is no restoration timeline, no damage estimate, and no insurance recovery figure. Any of those three landing badly gives it further to fall; a credible restoration schedule is what would stop it.

Manufacturing & Processing is the first broad sector move of this coverage. Eight names up meaningfully, SHIVM topping the turnover table, the first time a non-hydro name has done so. Every prior "best sector" traced to one or two block-driven stocks. If this holds a second session it is genuine rotation; if it fades, it joins the fourteen failed breakouts.

Breadth above parity has been reversed within one session both prior times it appeared, 1.66 on 13 August became 0.67; 1.01 on 20 August became 0.36. Today's 1.24 faces the same test tomorrow. Two consecutive sessions above 1.0 has not happened once in fifteen sessions and would be the first real evidence of a turn.

Bullish technical signals hit a record low of 19.71% on a day breadth flipped positive. The scan has never been below 20% in this coverage. Either it is lagging a genuine reversal or the price action is a dead-cat bounce off a capitulation low. Given the scan's record, it improved for four straight sessions into 14 August immediately before a breakdown, it should not be traded on alone, but a divergence this wide resolves quickly.

SBI's four identical Rs 4.03 crore blocks. Rs 16.12 crore in one commercial bank structured in equal tranches on the day margin lending data showed Rs 166.5 billion outstanding against share collateral with 72% in accounts above Rs 1 crore. Probably unrelated. Worth noting anyway, and worth watching whether the pattern repeats tomorrow the way ADBLB87 did across three sessions.

Margin lending at Rs 166.5 billion against a market down 3.5% in fifteen sessions. This is the slow-burning risk under everything else in this report. Collateral values are falling; 83% of the book sits in large accounts. Neither NRB nor the banks have signalled stress yet but it is the channel through which an equity decline transmits into the banking system and it deserves tracking from here.