KATHMANDU, Sept 16: Nepal’s stock market recorded a strong rebound on Tuesday, with the Nepal Stock Exchange, or NEPSE, rising 48.57 points to 2,633.62, its biggest single day gain in nearly two months.
The rise came a day after the Finance Ministry unveiled a 21-point Capital Market Strengthening and Recovery Action Plan 2083. Investors have responded positively to the plan, which covers reforms ranging from initial public offerings and the secondary market to institutional investment, taxation and market infrastructure.
The stock market had been falling steadily since the Rastriya Swatantra Party-led government took office. NEPSE stood at 2,879 points on Chaitra 15, two days after Prime Minister Balendra Shah and Finance Minister Swarnim Wagle took their oaths. It fell below 2,600 points over the past two weeks.
Market capitalisation, which stood at around Rs 4.894 trillion when Shah became prime minister, has since fallen to about Rs 4.53 trillion.
Tuesday’s rebound was accompanied by a sharp increase in trading activity. More than 20.38 million shares of 347 listed companies changed hands, generating over Rs 8.29 billion in turnover, almost double the Rs 4.68 billion recorded on Friday.
Nepse marginally lower in week after last session recovery
All 13 subgroups closed higher. Non-life insurance rose 2.82 percent, finance 2.23 percent, investment 2.52 percent and life insurance 2.59 percent. Banking rose 1.90 percent, development banks 1.76 percent, hotels and tourism 1.42 percent, hydropower 1.84 percent and microfinance 1.75 percent. The other, manufacturing and processing, mutual fund and trading groups also recorded gains.
Former chairperson of the Nepal Capital Market Investors Association, Radha Pokharel, attributed the rise to the government’s policy measures.
“The government’s policy has pushed NEPSE into double digit growth after a long time. This will have a positive impact on the market,” she said.
Investors have welcomed the government’s 21-point recovery plan, which aims to revive a sluggish market through structural and policy reforms. The plan covers the primary and secondary markets, debt instruments, institutional investment, taxation and market infrastructure.
Sagar Dhakal, president of the Stock Brokers Association of Nepal, described the plan as an important policy initiative for structural reform, investor protection and the long-term development of the capital market. He said provisions to modernise securities brokerage could make the market more transparent, competitive and investor friendly.
The plan proposes introducing a price discovery system for IPOs, implementing margin lending and short selling, developing the corporate bond market and allowing non-resident Nepalis to invest in the secondary market.
It also proposes sector specific eligibility criteria for IPOs in hydropower, manufacturing, hotels and tourism, agriculture and pharmaceutical industries. A market-based pricing and price discovery system is expected to allow companies to issue shares closer to their actual value.
The government also plans to develop alternative financial instruments such as bonds, money market products and exchange traded funds, giving investors options beyond equities. Modernising NEPSE and adopting a float index as the official market benchmark are also among the proposals.
New trading mechanisms, including margin lending, intraday trading, securities lending and borrowing, and short selling, will require supporting legal and market infrastructure. The plan also promotes green, social, disaster and project specific bonds.
Institutional investors such as the Employees Provident Fund, Citizen Investment Trust, Social Security Fund, insurance companies and mutual funds are expected to diversify investments currently concentrated in bank deposits and increase their participation in securities markets.
The government has also proposed reducing capital gains tax on long term investments and taxing net profit from share trading after adjusting gains against losses.
The plan covers a broad range of reforms, though some measures are routine in nature and others could face implementation challenges.
The market’s latest rise shows that investors are responding to policy signals. The key question now is whether the confidence will last. Expectations of political stability, policy clarity and private sector friendly economic reforms had initially lifted sentiment after the new government took office, but those expectations were not followed by sustained market gains.
With promised reforms slow to materialise, limited direct support for the capital market in the budget and weak overall economic activity, the market continued to slide. The new recovery plan has given investors a reason to hope, but sustained improvement will depend on how quickly and effectively the proposed measures are implemented.
