Nepal’s stock market extended its downward trajectory on Monday, with the Nepal Stock Exchange (NEPSE) index declining by 47.71 points to close at 2,831, marking a continued correction following the formation of a new government.

The latest drop follows a steep 71-point decline in the previous session, bringing the total two-day loss to 119 points. Prior to the government formation, the benchmark index had hovered around the 2,950 level, indicating a sharp shift in investor sentiment.

Intraday trading showed initial resilience, with the market stabilizing during early hours before witnessing a sharp sell-off in the latter half of the session. Market turnover also declined, with total trading value falling to Rs. 12.96 billion from Rs. 15.03 billion recorded a day earlier.

Market breadth remained heavily negative, with share prices of 237 companies declining compared to gains in 26 stocks, while five remained unchanged.

Sector-wise, all indices closed in negative territory. The trading sector led the losses with a decline of 2.56%, followed by finance (-2.00%), hydropower (-1.93%), non-life insurance (-1.82%), banking (-1.86%), and investment (-1.59%). Other sectors, including development banks, microfinance, life insurance, hotels and tourism, and manufacturing, also recorded notable declines.

Despite the broader downturn, a handful of stocks posted strong gains. Shares of Reliance Spinning Mills, Super Khudi Hydropower, Ridge Line Energy, Suryakund Hydroelectric, Bhujung Hydropower, and Hotel Forest Inn surged by the daily upper circuit limit of 10%. Additionally, Saptakoshi Development Bank recorded a gain of 9.83%.

On the losing side, Solu Hydropower dropped the most by 7.79%, followed by Unique Nepal Microfinance (-7.23%), CYC Microfinance (-6.86%), and Multipurpose Finance (-4.93%).

In terms of turnover, the most actively traded stocks included Ridi Power, Ngadi Group Power, Shivam Cements, API Power Company, and National Hydropower Company.

The continued decline underscores cautious investor sentiment amid evolving political developments, profit booking pressures, and a reassessment of near-term market expectations following the recent rally.