Seasonal Market Trends: Is There Really a Dashain Rally in NEPSE?

Introduction: The Dashain Effect on NEPSE

Dashain is Nepal’s biggest festival—a time of celebration, spending, and family reunions. But for stock investors, Dashain is also tied to a recurring question: Does NEPSE experience a “Dashain Rally”?

The belief is that stock prices often rise before Dashain, fueled by improved liquidity, positive sentiment, and portfolio adjustments. But is this rally real, or just a myth repeated every year?

1. The Concept of Seasonal Market Trends

Stock markets worldwide exhibit seasonal patterns:

Santa Claus Rally (US/Europe): Stocks often rise before Christmas.
January Effect: Small-cap stocks outperform early in the year.

Similarly, in Nepal, investors speak of the Dashain Rally, a pre-festival rise in NEPSE. Seasonal trends are often shaped by liquidity cycles, cultural spending, and investor psychology.

2. Why Dashain Might Boost NEPSE

2.1 Liquidity from Remittances

Remittance inflows increase before Dashain as migrant workers send money home.
Higher deposits in banks improve liquidity → more credit available → investors channel excess into NEPSE.

2.2 Investor Sentiment

Festivals create optimism, which often spills into financial markets.
Retail investors may buy shares anticipating a festive rally.

2.3 Institutional Portfolio Adjustments

Companies and banks align their balance sheets before Dashain holidays.
Dividend announcements often occur around this period, further boosting activity.

3. Counter-Arguments: Why the Rally May Be a Myth

3.1 Liquidity Outflow for Festival Spending

Households withdraw cash for shopping, gold, and travel.
This can reduce banking liquidity and pressure NEPSE.

3.2 Global & Policy Factors Dominate

NEPSE is heavily influenced by NRB’s monetary policy, interest rates, and forex reserves.
These macro factors may overshadow seasonal optimism.

3.3 Historical Volatility

In some years, NEPSE has fallen before Dashain due to tight liquidity or high interest rates.

4. Historical Trends: Is There Really a Dashain Rally?

2013–2015: NEPSE saw modest pre-Dashain gains, supported by strong remittance inflows.
2016–2018: Rally effect faded as liquidity tightened, and high CD ratios suppressed credit growth.
2020–2021: Pandemic and liquidity injection created sharp NEPSE rallies even around Dashain.
2022–2023: Tight NRB policies offset remittance inflows, limiting seasonal gains.

👉 Conclusion: The Dashain Rally is inconsistent, more a function of liquidity conditions than festival sentiment alone.

5. How Different Sectors React Around Dashain

Banking: Liquidity swings directly affect share prices.
Hydropower: Dividend news sometimes aligns with pre-Dashain optimism.
Insurance: Popular among retail investors chasing bonus shares/dividends.
Hotels & Tourism: Sentiment improves as domestic and international travel rises during festivals.

6. Investor Psychology During Dashain

Optimism Bias: Investors expect markets to rise, creating self-fulfilling rallies.
Dividend Chasing: Many buy stocks ahead of dividend announcements.
Short-Term Trading: Retail investors aim for quick pre-Dashain gains.

But post-Dashain, markets often stagnate or correct as trading volumes fall during holidays.

7. Smart Investor Strategies for Dashain Season

Track Liquidity Indicators: CD ratio, remittance inflows, NRB policy.
Avoid Blind Seasonal Bets: Don’t assume stocks will rise simply because Dashain is near.
Use Volatility: Pre-festival hype can create opportunities for quick gains.
Focus on Dividend-Paying Companies: Banks, insurance, and hydropower often announce dividends before festivals.
Long-Term Perspective: Seasonal rallies matter less than fundamentals.

Conclusion: The Dashain Rally—Myth or Reality?

The Dashain Rally in NEPSE is not guaranteed. While remittances and festive optimism can lift sentiment, liquidity outflows and macroeconomic pressures often neutralize the effect.

For investors, the lesson is clear: don’t rely on seasonal myths—rely on data. Smart traders may exploit short-term festive optimism, but long-term investors should stay focused on fundamentals, earnings, and liquidity conditions.

So, is there really a Dashain Rally? Sometimes yes, sometimes no. It’s not the festival itself, but the economic backdrop during Dashain that decides whether NEPSE rallies.