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Monetary Policy Cheers the Stock Market: NEPSE Gains 29 Points, Turnover Crosses NPR 11 Billion; Bank & Microfinance Lead Momentum

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NEPSE TRADING

Monetary Policy Cheers the Stock Market: NEPSE Gains 29 Points, Turnover Crosses NPR 11 Billion; Bank & Microfinance Lead Momentum

The newly announced monetary policy for the fiscal year 2082/83 (2025/26) by Nepal Rastra Bank (NRB) has injected a fresh wave of optimism in the stock market. Following its release, the NEPSE index climbed by 29.00 points, closing at 2760.80 on Sunday. In intraday trading, the index surged by over 66 points, nearing the 2800 mark, although it later saw some volatility before closing strong.

Turnover Crosses NPR 11 Billion; Banks and Microfinance Stocks Lead

The market's positive sentiment was clearly reflected in the turnover, which rose significantly to NPR 11.41 billion, up from NPR 9.68 billion in the previous session.
The banking and microfinance sectors led the rally, with the banking sub-index climbing nearly 3.5%, and the microfinance index also gaining 3.50%.

Out of the 13 sub-indices, 8 closed in the green, while 5 sub-indices, including hydropower, investment, non-life insurance, others, and trading, closed slightly lower.

Key Highlight: Loan Limit Raised on Share Collateral

The most notable provision in the new monetary policy is the increase in the loan limit on share collateral for individuals—from NPR 15 crore to NPR 25 crore. This move, long requested by investors, is expected to increase market liquidity and participation.

In addition, NRB has allowed BFIs (banks and financial institutions) to raise capital with NRB approval, including through rights shares issuance.
The interest rate corridor has been adjusted, with the upper bound reduced from 6.5% to 6%, and the lower bound from 3% to 2.75%, signaling a likely drop in deposit rates. Lower deposit returns typically encourage investors to shift toward the stock market.

NRB also announced that it will review the existing cap on microfinance institutions’ dividend payouts, which currently restricts them from distributing more than 15% annually unless excess goes into regulatory reserves. This policy shift has further drawn attention to the microfinance sector.

Technical Analysis: Resistance Broken but Mixed Signals Appear

Technically, NEPSE has broken a long-standing resistance zone around 2740, and closed well above it at 2760, with a gap-up opening.
However, a shooting star candlestick formed at the day’s high raises some caution. Typically, this pattern signals a potential trend reversal, especially when formed with high volume — which was the case here.

Also, RSI (Relative Strength Index) has entered the overbought zone (above 70), suggesting a possibility of near-term profit booking.

Broker Activity: Mixed Sentiment Amid Margin Stress

Broker-wise, activity was divided. Out of the top 10 brokerage firms, 6 were net sellers, while 4 were net buyers.
Some brokers reportedly faced pressure from margin positions and unsettled leveraged trades, influencing late-session volatility.

The new monetary policy has offered a much-needed psychological boost to the stock market, driven by increased loan limits, capital raising flexibility, lower interest expectations, and dividend policy review.

While investor confidence has visibly improved and turnover surged, technical indicators suggest that caution is warranted in the near term.
The future trajectory of NEPSE will now depend on the implementation of monetary measures, interest rate trends, earnings season, and political stability — all of which remain key to sustaining this bullish momentum.

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