NEPSE Falls 35 Points Amid Year-End Settlement Pressure, Brokers Limit Margin Trades
NEPSE dropped 35.09 points to 2,725.71 as brokers restricted margin trading and investors sold shares to settle dues ahead of fiscal year-end.
Nepal's stock market index NEPSE declined by 35.09 points (1.27%) on Monday to close at 2,725.71, reversing gains from the previous day. The drop comes just two days before the fiscal year-end, with brokers and investors citing the “closing effect” as a major contributor.
Analysts describe the “closing effect” as a technical correction driven by fiscal-year obligations. Brokers typically halt margin-based trading and push clients to clear outstanding dues before year-end. This dynamic results in forced selling pressure, dragging market indices lower.
Sunday's session had seen NEPSE jump by 29 points in response to Nepal Rastra Bank’s monetary policy, which raised the loan ceiling against share collateral to NPR 2.5 million. The policy was interpreted as market-friendly, particularly benefiting banking and financial stocks.
However, Monday saw sharp corrections in the same sub-indices that had rallied the day before. Former Stock Brokers Association President Narendra Raj Sijapati remarked, “Brokers are avoiding margin trades, and investors need to settle accounts. This has led to selling pressure and a decline in the NEPSE index.”
He added that while the monetary policy remains favorable, technical and settlement-driven effects will likely persist through Tuesday and Wednesday. “We may see a rebound starting next Sunday once the fiscal cycle resets,” he projected.
Trading volume also saw a steep decline. Turnover dropped from NPR 11.41 billion on Sunday to NPR 8.17 billion on Monday. A total of 72,601 transactions were recorded, involving over 21.1 million shares. Of the 248 listed companies that traded, only 50 saw price gains while 198 declined.
Except for hydropower, all major sub-indices ended in the red. Banking fell the most at 2.46%, followed by life insurance (-1.36%), development banks (-1.48%), microfinance (-1.23%), and finance companies (-1.13%). The hydropower index was the sole gainer, inching up 0.15%.
Despite favorable macroeconomic signals, short-term technicals and end-of-year accounting requirements are expected to dominate sentiment in the remaining trading days of the fiscal year.