Market reform measures fail to lift sentiment as NEPSE extends weekly decline

The stock market extended its downward trend on Friday, with the Nepal Stock Exchange (NEPSE) index falling 11.90 points, or 0.45%, to close at 2,587.25. The decline came despite a series of government and regulatory measures aimed at restoring investor confidence and improving the capital market.

The latest fall capped a difficult week for the market, with NEPSE losing 42.55 points overall. The index declined by double digits in three of the week’s four trading sessions, while the only positive session recorded a gain of less than one point.

Investor sentiment has remained subdued despite the Ministry of Finance’s recently announced 21-point action plan for stock market reform. The plan, along with measures being addressed by the Nepal Rastra Bank, Securities Board of Nepal (SEBON) and other relevant agencies, has so far failed to translate into a sustained recovery in the market.

The issue was also discussed by the House of Representatives’ Finance Committee, which held consultations with stakeholders on Wednesday over measures to improve the capital market. The committee directed the government to introduce a new bill to amend the Securities Act, with the proposed legislation intended to clarify the regulatory framework and address institutional and operational issues in the market.

However, the parliamentary discussions and reform initiatives did not produce an immediate positive response from investors. The continued decline suggests that market participants remain cautious and are waiting for concrete implementation of the proposed measures rather than reacting to policy announcements alone.

Trading activity also weakened on Friday. A total of 356 securities changed hands in 43,685 transactions, with 11.91 million shares traded for a total turnover of NRs 4.29 billion, down from NRs 4.89 billion on Thursday.

Market breadth remained firmly negative. Of the 13 sectoral indices, 11 declined while only two—mutual funds and trading—advanced. The manufacturing and processing sector recorded the largest sectoral decline, falling 0.73%.

At the individual stock level, 207 companies closed lower, compared with 61 gainers, while 11 remained unchanged. Sindhu Development Bank recorded the largest decline, falling 8.55% to NRs 448 per share, while Dhaulagiri Microfinance dropped 4.95% to NRs 1,090.10.

Debt securities, however, attracted notable investor interest. NMB Debenture 10.75%–2089/2090 gained 14.29% to NRs 1,400, the biggest increase of the session, while 10.75% SBL Debenture 2089 rose 8.80% to NRs 1,360. The SBL debenture recorded the highest turnover of the day at NRs 265.3 million, followed by Reliance Spinning Mills with turnover of NRs 155.3 million.

The weak market performance comes as authorities pursue a broader overhaul of Nepal’s capital market. Alongside the Finance Ministry’s 21-point action plan and the Finance Committee’s recommendations, SEBON is working on reforms covering IPO approvals, price discovery, share allotment, qualified institutional investors, brokerage services and market infrastructure.

SEBON has also indicated that its proposed net-worth requirement for companies seeking to issue shares through IPOs is not final and could be revised following stakeholder feedback. The regulator is preparing a standardised IPO approval procedure aimed at making the process more systematic and transparent.