April 11 to May 13, 2025: beed’s take on the market

The Nepal Stock Exchange (NEPSE) index fell by 38.78 points (-1.45%) to close at 2,634.23 points between April 11 and May 13. The index reached its peak of 2,722.73 on April 17 following an initial upward trajectory but it subsequently entered a downward trend. The lowest point during the review period was recorded on May 5 at 2,610.40 points. 

A brief recovery pushed the index up to 2,673.69 driven by IPO approval momentum and reform optimism before it declined again by May 13 amid regulatory delays and cautious investor sentiment. Despite the fluctuation in the index, trading volume rebounded significantly during the review period, rising from a previous contraction of 38% to a 54% increase, indicating improved investor sentiment and market participation. This reflects a cautious yet active trading environment. (See Figure 1)

During the review period, six of the 11 sub-indices landed in the red zone, while the remaining five were in green. Hydropower, Insurance and Hotels sub-indices led the gains, while Others, Finance and Trading sectors dragged overall performance. 

The Others sub-index (-8.17%) was the biggest loser as the share value of Nepal Reinsurance (-Rs 166.26), Muktinath Krishi Company (-Rs 135.92) and Himalayan Re-Insurance (-Rs 93.07) decreased substantially. Trading sub-index (-5.73%) was second in line having witnessed a fall in the share price of Bishal Bazar Company (-Rs 377.06).

Finance sub-index (-5.50%) followed suit with a decrease in the share value of Best Finance (-Rs 73.77), Central Finance (-Rs 73.07) and Nepal Finance (-Rs 65.95). Similarly, the Commercial Bank sub-index (-3.79%) also fell as the share prices of Nepal SBI (-Rs 35.1), NIC Asia (-Rs 30.33) and Standard Chartered (-Rs 28) went down. Likewise, the Microfinance sub-index (-3.31%) witnessed a fall in the share prices of WEAN Nepal Laghubitta (-Rs 1,028.71), Samudayik Laghubitta (-Rs 307.54) and Swabhimaan Laghubitta (-Rs 247.13). The Development Bank sub-index (-0.17%) saw a decline in share values of Sindhu Bikash Bank (-Rs 401.02), Saptakoshi Development Bank (-Rs 247.99) and Narayani Development Bank (-Rs 193.99).

Table 1: Sub-indices during the review period

April 11 to May 13, 2025.

In the green zone, Life Insurance sub-index (+1.25%) went up with rise in the share prices of Crest Micro Life Insurance (+Rs 1,902.1), Guardian Micro-Life Insurance (+Rs 29.78) and Prabhu Mahalaxmi Life Insurance (+Rs 4.06). The Non-Life Insurance sub-index (+2.20%) followed suit primarily driven by rise in the share value of Nepal Micro Insurance (+Rs 1,902.5) which outweighed the modest decline in Shikhar Insurance (-Rs 14.13) and IGI Prudential Insurance (-Rs 19.03) share values. 

The Manufacturing and Processing sub-index (+2.23%) witnessed a subtle increase with surge in share prices of Sarbottam Cement (+Rs 68.99), Himalayan Distillery (+Rs 35.68) and Shivam Cement (+Re 0.7). The Hydropower sub-index (+2.99%) followed suit with a slight gain in share values of Radhi Bidyut Company (+Rs 280.58), Universal Power Company (+Rs 136.1) and Sanima Mai Hydropower (+Rs 126.82). 

Finally, among the sub-indices, the Hotels and Tourism sub-index (+3.64%) was the top performer with a rise in the share value of Soaltee Hotel (+Rs 50.48), Kalinchowk Darshan (+Rs 43.2) and City Hotel (+Rs 18.56). 

News and Highlights

Nepal’s capital market regulator, the Securities Board of Nepal (SEBON), faced intense scrutiny following a raid by the Commission for the Investigation of Abuse of Authority (CIAA) on May 8. The CIAA seized documents of 89 companies awaiting Initial Public Offering (IPO) approval, 33 of which were hydropower firms after complaints alleged that SEBON officials demanded up to 5% commission for IPO clearances. This has created serious concerns, especially with over Rs 19.44 billion in capital stuck in delays, some spanning over 22 months.

SEBON recently approved the IPO of Bikash Hydropower Company amounting to Rs 909 million on April 28 with Prabhu Capital as the issue manager. Although in the first nine months of Fiscal Year 2024/25, SEBON cleared public issues worth Rs 28.57 billion, including rights shares, mutual funds, debentures and a few IPOs, the overall pace of IPO approval remains slow.

Against this backdrop, the Stock Broker Association of Nepal submitted a 12-point reform proposal to the Ministry of Finance for FY 2025/26 aiming to revitalise the capital market through tax clarity, easier market access for NRNs and foreign investors, and better investor protection. Key suggestions include finalising capital gains tax, starting an auction system to fix close-out issues, using lower tax rates for long-term investors, making PAN mandatory for all, and introducing advanced trading instruments like intraday trading and ETFs. These efforts are seen as vital to restoring investor confidence and modernising Nepal’s capital market.

Outlook

Nepal’s capital market is at a pivotal moment with signs of renewed optimism despite recent challenges. The recent developments including increased regulatory scrutiny have highlighted longstanding procedural bottlenecks in the capital market, creating an opportunity for further reform. With over Rs 19 billion in capital awaiting IPO approval, there is a need for greater transparency and efficiency to support market growth. At the same time, investor behaviour has been seen shifting from fixed deposits to equities, which reflects a search for better returns. 

The rebound in trading volume signals rising investor participation driven by the approaching fiscal year-end and anticipation of favourable provisions in the upcoming fiscal policy. If regulatory reforms, particularly faster IPO approvals and better governance are implemented, Nepal’s market could evolve into a more vibrant, transparent and resilient system aligned with national economic goals. 

This is an analysis from beed Management Pvt Ltd. No expressed or implied warranty is made for the usefulness or completeness of this information, and no liability will be accepted for the consequences of actions taken based on this analysis.