NEPSE 2024: A Deep Dive into the Highs, Lows, and Key Drivers

Background

On August 19 2021, Nepse achieved its all-time high with point 3227 with a volume of 20.49B, when everyone was excited about the share market. The time people used to be so speculative that holding a few shares of any one company would make them millionaires within a few years. The craze was different at the period, inclusively driven by the herd of people. People sitting in local cafes, public buses, barbershops, malls, and everywhere used to chatter about Nepse and the listed stocks. In that same period, the Share Market became the buzzword. Investors are choosing companies like the Blindfolded Monkey Throwing the Dart, which was insane. And there comes the movement of something supreme, i.e. the market itself, the correction of around 45% from the top of 3227 to 1806,  taking 13 months till June 2022, a relatively quick correction. The investors have lost around 1788351.79 million NRS, which caused them trauma, and some investors fled away from the market, losing their hard-earned money, property and even relations.

NEPSE in 2024

From June 2022 to July 2024, for 2 years, Nepse was sideways between the range of 1820 and 2250, where the market tested the patience level of the investors; those having patience stayed and earned those in a rush ran away.

For the first six months of 2024, Nepse ranged between the same points. Stagnation and low liquidity resulted in a sluggish market, and investors were hesitant to invest due to slow movement, which we could call risk aversion or “market fatigue”. The unstable politics were also the cause of this behaviour in the market. The position of the Nepal Securities Board (SEBON) chairman has remained vacant since January 6, leaving Sebon without the chief for nearly 11 months in 2024, because of which investors lost confidence in investing.  After the formation of the coalition government of the Nepali Congress and CPN UML in June, the appointment of the finance minister, Mr Bishnu Prasad Poudel, an optimistic leader for the capital market, Nepse reacted with a massive upward rally of more than 48%, i.e. just within one and half months. The government of Nepal has appointed Mr Santosh Narayan Shrestha as the chairman of the SEBON in November.

With the appointment of a chairman, it is foreseen that the board’s leadership and operational efficiency will significantly increase on matters related to capital market development by issuing necessary securities regulations and directives. Due to the lack of appointing a presiding officer, SEBON has issued the initial public offering (IPO) of only two companies, Sarbottam and Guardian, four mutual funds, and three future public offerings (FPO) for 2024. This reflects the regulator (SEBON) being dormant for a year, which will impact the overall development of Nepal's capital market.

In July, Nepse broke the resistance of 2275 and obtained the year high of 3048, the highest point in 35 months with a volume of 28.83B NRS; then again, it dipped the low of 2442, which is the Fibonacci retracement of exactly 0.618 (golden ratio). Again, since October, the index has been struggling in the range without any particular direction movement. On the last day of the year, Nepse closed at 2576.50. This year, investors with a stock’s buy and hold strategy have gained 25% based on the Nepse Index.

Iran’s attack on Israel on October 1 and the win of Donald Trump as The president of The United States of America remained significant events in the year 2024; by this, the global market was affected. However, the Nepse didn’t react to this news, which confirms that the Nepse is still isolated, has low foreign investment, and lacks speculative activity. It also reflects the lack of diversification and integration with the global financial ecosystem, which could limit growth and investment opportunities for Nepal in the long term.

Coming to reality, this year, the speculators and market manipulators have also openly controlled the index to earn abnormal profits, especially on the low-capitalization stocks. KRBL, NFS, NABBC, KBSH, and other finance and hydropower stocks had gained a significant market rally, all by the market makers, on which many retail and amateur investors became the prey.  Investors also found the regulator observant but discreet, and thousands of retail investors got trapped.

Expectation for 2025

Due to its non-static nature, predictions of the movements and its price behaviours have become extremely challenging and crucial. However, what a rational investor can expect from a developing capital market like ours is the active participation of the regulator in prohibiting fraudulent and unfair trade practices relating to securities markets, prohibiting insider trading in securities, and protecting the investors' trust towards capital markets. The expectation from the NEPSE is to be purposeful to improve the financial well-being of the people and to be committed to core values- Integrity, Trust, Respect and care for the individual, Customer Oriented Culture, Passion for Excellence, Teamwork and others which will always remain on the welfare of the investors.

Tabulation of Nepse and Other Major Indices

Aricle By: Purushottam Khanal