NEPSE Market Analysis: Profit Booking in Hydropower, Sideways Trend Continues, Mixed Broker Activity

In recent days, profit booking has been observed in some major companies within the hydropower sector, causing noticeable pressure on the Nepal Stock Exchange (NEPSE) index. Although the market showed positive momentum during the first two hours of trading on Monday, a decline in heavyweight stocks dragged the index downward later in the day. This reflects continued uncertainty in the market.

Today, the hotel and tourism sub-index attracted investor attention, surging by more than 4.5%, while most other sectors saw only marginal gains. Out of 13 sectoral indices, 8 closed in green, while 5 ended in red. The finance sub-index recorded the highest decline of 1.22%, indicating reduced investor confidence in financial institutions.

The NEPSE index closed with a marginal gain of 2.80 points at 2,658.66. On Sunday, the market had seen a slight gain of 0.47 points. However, the standout highlight of today was the significant increase in total turnover. Over 318 stocks were traded through more than 105,000 transactions, with the total turnover exceeding NPR 13.18 billion — a sharp rise compared to the previous day's NPR 11 billion+.

Two companies hit the upper circuit level today — Pure Energy and People's Power Ltd. Pure Energy has been rallying continuously since its listing, while People's Power saw a boost following its recent 50% rights share adjustment. On the flip side, shares of Upper Hewakhola Hydropower dropped by more than 7%, while Corporate Development Bank saw a gain of 8.5%.

In terms of trading volume, Sanima Mai Hydropower topped the list with over NPR 950 million in turnover, followed by Ngadi Group Power (NPR 900 million+) and Butwal Power Company (NPR 580 million+), signaling ongoing investor interest in the hydropower sector.

Despite positive economic cues—such as the appointment of a market-friendly central bank governor, declining interest rates, and the reduction of share loan risk weight to 100%—the NEPSE index remains stuck around the 2,600 level. According to Nepal Rastra Bank, share mortgage loans reached NPR 125 billion by the end of Baisakh, which is NPR 35 billion higher than the same period last year. Yet, investor sentiment remains subdued, raising concerns about declining confidence in the market.

From a technical analysis perspective, the market appears to be at a critical juncture. An inverted hammer candlestick pattern has formed for the second consecutive day, signaling caution. Failure to break above the previous high confirms market weakness. The NEPSE index is also struggling to break through the 20- and 50-day moving averages, indicating a lack of strong upward momentum.

In the second half of the session, some large-cap hydropower stocks reacted to a double-top formation, triggering supply pressure. Turnover distribution patterns remain consistent with previous sessions, indicating that institutional or experienced investors are still actively booking profits. However, the fact that today saw the highest turnover in the past four months shows that liquidity is still present in the market.

Looking into broker activities, among the top 10 brokers, 5 recorded more buying than selling, while the other 5 had more selling pressure. Broker No. 58 topped trading with NPR 1.40 billion in turnover — purchasing shares worth NPR 640.8 million and selling NPR 767.7 million. Broker No. 45 traded NPR 1.24 billion, with NPR 663.3 million in buy volume and NPR 579.1 million in sell volume. Broker No. 42 executed NPR 1.01 billion in trades with nearly equal buy and sell volumes. Brokers 34, 42, and 17 showed higher selling activity.

In summary, while the market is still liquid, overall investor sentiment remains cautious. Even analysts are uncertain about the market's direction. Technically, NEPSE is at a decisive point and needs a strong breakout above key resistance levels to restore investor confidence. Until then, caution is advised.