Prepaid Reaction in Market: Encouraging Improvement in NEPSE Ahead of Budget

On the eve of the upcoming fiscal year's budget presentation, the Nepal Stock Exchange (NEPSE) witnessed a remarkable improvement. Amid expectations of a positive budget among investors, the market displayed a prepaid reaction.

On Wednesday, the NEPSE index rose by 17.44 points, reaching 2693.06. Similarly, the Sensitive Index increased by 4.23 points, the Float Index by 1.48 points, and the Sensitive Float Index by 1.59 points. Although the market appeared stable throughout the day, a significant surge in the banking sector during the final hours of trading pushed the index upward by double digits.

According to market analysts, the perception that the current governor and finance minister are market-friendly is gaining strength. Analysts state, “If the upcoming budget includes policies to promote the capital market, there is a strong possibility of the market surging further.”

On Wednesday, the market saw a share transaction volume of NPR 8.58 billion, a notable increase compared to the previous day’s NPR 6.52 billion. With transaction volumes declining in recent days, today’s improvement has injected fresh energy into the market. Expectations that the budget will recognize capital gains tax as a final tax have further boosted investor confidence.

On this day, shares of Om Megashree Pharmaceuticals and Pure Energy traded at positive circuit levels. The share price of Green Development Bank also rose by 9.85%. On the other hand, Barahi Hydropower’s shares declined by 5.26%, and Krishi Micro Life Insurance’s shares dropped by 5.10%.

In terms of transaction volume, Ngadi Group Power Company led the market with NPR 1.05 billion worth of shares traded. Likewise, Radhi Vidhyut Company recorded share transactions worth NPR 600.6 million. Out of 13 sub-groups, 8 saw their indices rise, while 5 declined. The Development Bank group topped the gains, rising by 1.75%. Alongside this, sub-groups like Hotels & Tourism, Hydropower, Investment, Manufacturing & Processing, and Mutual Funds also saw gains. However, sub-groups such as Finance, Life Insurance, Microfinance, Non-Life Insurance, and Others experienced declines.

Investors are now focused on the budget presentation in parliament on Thursday. Analysts and investors are optimistic that the budget will have a long-term positive impact on the capital market.

Technical Analysis:
The technical analysis of the Nepal Stock Exchange (NEPSE) has sparked interest in the market. The last 6 candles have continuously tested the pivot area around 2660–65 but have failed to break down. These candles have attempted to treat the 200-day Moving Average (200 MA) as support to prop up the market, although the death cross crossover remains valid.

According to analysts, the market has found strong support in this area, but further developments are needed to determine its medium- to long-term direction. In the coming days, if the 2660 level is breached, the market could face additional downward pressure. However, if this level holds, it could signal positive momentum.