NEPSE posts modest gain despite weak market activity

The Nepal Stock Exchange (NEPSE) experienced a mixed trading week, with the benchmark index inching up by 0.25% while market participation waned considerably. Investor wealth saw a slight increase, but the sharp drop in turnover volume signals caution among market participants. This subdued activity is largely attributed to the anticipation surrounding the upcoming budget announcement, a common trend as investors await fiscal policy direction.

While the overall market capitalization grew, the decline in trading volume suggests that the modest gain in the index might not reflect broad-based investor confidence. Sectors like development banks and manufacturing and processing saw declines, indicating profit-booking after recent rallies. Conversely, the 'others' sub-index and mutual funds showed resilience.

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The market returned after touching around 2,685 points during intraday trading on Tuesday, within the psychological support zone of 2,680 to 2,700 points, which is a positive sign.

Market analysts, like Manish Aryal, highlight the psychological support zone around 2,680 to 2,700 points as a positive indicator, suggesting that selling pressure is easing. The expectation is that a favorable budget announcement could potentially boost trading volume and drive the market upward in the following week. This cautious optimism is typical for the Nepali market, where fiscal policy events heavily influence investor sentiment and trading behavior.

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With the budget announcement approaching, the market could witness an upward swing if trading volume increases next week.