The Nepal Stock Exchange (NEPSE) has shown signs of recovery, with the index rising by 6.22 points to close at 2085.30 on Tuesday. The microfinance sector led the gainers with a 1.48% increase. However, the daily trading volume has not picked up significantly, indicating that market participants are cautious.

Current Market Conditions and Trading Volume

The increase in buying and selling activities suggests increased participation from both buyers and sellers. However, experts caution that without a substantial rise in trading volume, the market's growth may not be sustainable. Currently, an average daily turnover of NPR 4 to 5 billion is needed for investors to be optimistic about market improvement. Before the budget announcement, the daily turnover exceeded NPR 5 billion. Post-budget, the average turnover has decreased, reflecting investor dissatisfaction with the budget's provisions. This has impacted both the NEPSE index and trading volumes.

Investor Sentiment and Market Trends

Despite some corrections and sideways movements, many investors remain hopeful that the market will gradually gain momentum. Factors such as abundant liquidity in banks, declining interest rates, and the potential for institutional investors like banks to buy shares contribute to this optimism. The recent market slowdown is attributed to short-term traders booking profits and adopting a "wait and see" strategy before re-entering the market. Overall, the NEPSE index has been in a sideways trend after dropping to the 2000-point level, indicating stability without significant upward or downward movement. A large group of investors waiting on the sidelines has contributed to this sideways trend.

Impact of Regulatory Policies

The market has been in a bearish cycle for nearly three years due to strict regulatory policies. Some obstacles, such as limits on share collateral loans, remain in place, preventing large investors from buying shares as desired. Experts advise retail investors to be cautious and choose fundamentally strong companies with good financial indicators like profitability, reserves, earnings per share (EPS), and net worth. Investing in such companies can help mitigate risks.

Technical Analysis of NEPSE Chart

The NEPSE technical chart shows the index fluctuating between support and resistance levels. After dropping to around 2000 points, the index has attempted to recover but faces resistance at higher levels. The Fibonacci retracement levels indicate key support at 1986 and resistance at 2153. The volume bars suggest fluctuating trading activities, with notable spikes during upward movements.

Market Performance and Top Stocks

On this trading day, shares of 315 companies were traded, with a total of over 8.3 million shares changing hands. The total turnover was more than NPR 4.08 billion. Among the top gainers were companies like Microfinance, with a 1.48% increase. CEEDB Hydropower Development Company topped the trading value chart with a turnover of NPR 209.2 million. Nepal Finance and NRN Infrastructure and Development Limited followed in second and third place, respectively.

In conclusion, while the NEPSE index shows signs of recovery, sustained growth depends on increased trading volume and positive regulatory changes. Investors are advised to remain cautious and invest in fundamentally strong companies to navigate the market's uncertainties.