Market witnesses volatility but stabilises before close

The stock market showed signs of recovery following the resignation of Sudhan Gurung from the position of Home Minister, after experiencing sharp fluctuations earlier in the day.

The NEPSE index, which had been on a decline since the start of trading and dropped as low as 2,762 points, recovered later and closed at 2,804.17 points, down by just 2.95 points on Wednesday.

Market volatility was high throughout the day. The index had fallen to 2,763 points before rebounding to an intraday high of 2,818 points.

Gurung had sparked concern among the business community after ordering the arrest of former Prime Minister KP Sharma Oli and former Home Minister Ramesh Lekhak just a day after assuming office, contributing to uncertainty in the market.

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Later, several high-profile businesspersons, including Deepak Bhatta, were arrested on charges of siphoning off public funds. It subsequently emerged that Gurung had concealed his investments in public disclosures related to Bhatta’s company, one that several departments are investigating. There were additional concerns such as the source of the Home Minister’s substantial wealth where Gurung has provided inconsistent explanations.

Gurung also held a late-night meeting with the Inspector General of Police (IGP) on Tuesday, lasting several hours and fueling speculation that further high-profile arrests may take place on Wednesday. Investors have raised concerns that these arrests may be driven more by populist motives than by adherence to due process, creating an uncertain environment.

Despite Wednesday’s overall dip, several sectors including banking, finance, investment, manufacturing and processing, and non-life insurance recorded gains. However, declines in other sectors pulled the market down. Shares of 138 companies fell, while 121 companies saw gains and 10 remained unchanged.

Hotel Forest Inn recorded the biggest loss, with its share price dropping by 10.75%. Other notable losers included Asian Hydropower and Corporate Development Bank.

On the gaining side, Palpa Cement, Suryakund Hydropower, and Shikhar Power Development Company hit the positive circuit limit, each rising by 15%. Jhapa Energy and Gurans Microfinance also posted strong gains of 14.08% and 9.16%, respectively.

Trading volume increased significantly amid the volatility. Total turnover reached NRs 7.81 billion, up from Rs 5.77 billion the previous day.

National Hydropower Company recorded the highest transaction value at NRs 413.4 million, followed by Reliance Spinning Mills with NRs 327.8 million and Solu Hydropower with NRs 316.9 million. Other actively traded companies included Hotel Forest Inn and SY Panel.

Overall, the market managed to limit its losses by the close of trading, despite sharp swings earlier in the day.