Low-Cap Hydros Spark Investor Interest; NEPSE Faces Resistance Near 2,825 Level

By Dipesh Ghimire Kathmandu – Nepal’s equity market is witnessing a tactical shift as investors flock toward low-priced hydropower stocks, signaling a renewed appetite for high-beta securities. Led by Ankhu Khola Hydropower (AKJCL), a wave of interest has swept across a dozen companies trading near or below the NPR 200 mark, even as the broader index faces technical hurdles.

Retail Frenzy in Low-Value Stocks

The recent rally in Ankhu Khola has acted as a catalyst, drawing retail investors toward undervalued hydropower scripts. Market analysts observe that the preference for "low-cap" stocks stems from the psychological advantage of high volume—where investors can acquire more units with less capital—and the potential for significant percentage gains from minor price movements.

Joining the rally are stocks like Upper Tamakoshi, Shiv Shree Hydro, Balephi Hydro, Himal Dolakha, National Hydro, and Liberty Energy. While most of these were trading below NPR 200 just weeks ago, they have recently seen aggressive buying. On Thursday, both Himal Dolakha and Shiv Shree hit the positive circuit breaker, underscoring the intense demand in this segment.

Market Correction Amid High Turnover

Despite the localized excitement in the hydro sector, the benchmark NEPSE Index shed 17.53 points on Thursday to close at 2,714.05. The decline is attributed to profit-booking by short-term traders after a period of sustained gains.

However, the market’s underlying strength remains evident in its liquidity. Total turnover stood at a robust NPR 14.56 billion, with over 35.4 million shares changing hands. Analysts interpret this high volume during a price dip as a sign of "accumulation," where institutional and savvy investors pick up shares at lower levels.

Market Performance Snapshot:

• Total Turnover: NPR 14.56 Billion

• Gainers: 85 companies

• Losers: 170 companies

• Top Turnover: Ngadi Group Power (NPR 599.9 Million)

Technical Outlook: The 2,825 Hurdle

From a technical perspective, the market is maintaining a healthy "Higher High" and "Higher Low" pattern. After breaking out of a long-term downtrend in mid-December, the index is now navigating a consolidation phase.

The immediate challenge for the bulls lies at the 2,824.85 resistance level. Technicians suggest that the market requires a fresh surge in buying pressure and volume to breach this ceiling. On the downside, if the correction continues, 2,568.94 is expected to act as a primary support level. As long as the index sustains itself above the psychological mark of 2,700, the overall bullish sentiment remains intact.

Sectoral Divergence

While the hydro sector shimmered, development banks and microfinance institutions faced the brunt of the selling pressure. Companies like Corporate Development Bank, Mithila Laghubitta, and Saptakoshi Development Bank hit the negative circuit, losing 10% of their value. This divergence suggests a "sector rotation" where capital is moving out of overextended financial stocks into lower-priced energy scripts.

As the market enters this consolidation phase between 2,750 and 2,820, all eyes are on the upcoming week to see if NEPSE can gather the momentum needed to challenge its previous historical highs.