Nepal's stock market has remained under sustained pressure since the Balen Shah-led government assumed office, with the NEPSE index falling by around 350 points despite expectations of investor-friendly reforms. The benchmark index has now slipped to the 2,600-point range, marking its lowest level in nearly six months.

Ahead of the government's formation, the Rastriya Swatantra Party (RSP) had pledged several capital market reforms in its election commitments, raising hopes among investors. On Chaitra 12, just before the new government took office, the NEPSE index stood at 2,950.16 points. Since then, however, the market has witnessed a steady decline.

Investors had also pinned high expectations on the fiscal year 2083/84 budget. The government introduced several measures aimed at strengthening the capital market, including granting legal recognition to capital gains tax as the final tax, encouraging Non-Resident Nepali (NRN) investment, and proposing reforms to the Nepal Stock Exchange. Despite these announcements, the market failed to respond positively and declined immediately after the budget was unveiled.

Market analysts believe investor sentiment weakened due to regulatory uncertainty, enforcement actions against some business groups, and the lack of confidence among large institutional investors. Nepal Shareholders Association President Ghanshyam Pandey has stated that uncertainty in the investment environment prevented major investors from taking fresh positions in the market.

Attention then shifted to the Nepal Rastra Bank's Monetary Policy, which many expected would provide additional support to the stock market. However, the policy introduced only limited measures directly benefiting equity investors. One notable provision was expanding share-backed lending primarily against financially strong companies, which received mixed reactions from the market.

Former Nepal Rastra Bank Governor Chiranjibi Nepal said the central bank's policies have a significant influence on Nepal's stock market because banking and financial institutions account for a large share of listed companies. According to him, the recent policy direction has also contributed to the market's weakness.

Brokerage firms and market experts believe investors were disappointed by the lack of strong capital market reforms in the monetary policy. In addition, fiscal year-end settlement pressure, limited margin financing by brokers, and profit-booking activities have further increased selling pressure.

Analysts say restoring investor confidence will require effective implementation of announced reforms, greater regulatory clarity, and stronger policy consistency. Market participants are now closely watching the Securities Board of Nepal (SEBON) for further regulatory decisions that could help revive market sentiment.