KATHMANDU: After a prolonged period of uncertainty, the government appointed economist Dr. Biswo Nath Poudel as the new Governor of Nepal Rastra Bank last Tuesday. The decision has had a significant and immediate impact on Nepal’s stock market, with the NEPSE index experiencing a notable rise throughout the trading week.
The Nepal Stock Exchange (NEPSE) had been stagnant for weeks as investors awaited the appointment of a new governor. With Dr. Poudel’s appointment, confidence surged in the market. Over the five trading days from May 18 to 22, NEPSE rose by 76.7 points, averaging a daily increase of 15.34 points.
The index climbed from 2,611.85 points at the start of the week to close at 2,688.55 points. During the week, NEPSE reached its highest point at 2,771.47 and dipped to a weekly low of 2,605 points.
The appointment of the governor was viewed by investors as a turning point. There were no other significant policy changes or economic news that could have fueled the market’s rally, suggesting the appointment alone influenced the sentiment. Stakeholders are now optimistic that the new governor will bring favorable monetary policies that support the stock market.
Although NEPSE is regulated by the Securities Board of Nepal, Nepal Rastra Bank’s monetary decisions directly affect the stock market, especially because the banking and financial sectors dominate stock transactions.
According to Investment Forum Chairperson Tulsiram Dhakal, the governor’s decisions influence not just the financial system, but also infrastructure and fiscal policy. He stated that the overall economy operates under the governor’s guidance.
Stock analyst Dinesh Acharya added that even minor decisions by the central bank can significantly impact the market, especially given the large share of banking institutions in trading activities.
Trading volume for the week surpassed Rs 43.7 billion, which is considered a moderate level. On average, the daily turnover stood at Rs 8.74 billion.
A total of 95.4 million shares were traded throughout the week, averaging 19 million shares per day. There were nearly 400,000 trading transactions during the five-day period, with an average of around 79,800 transactions per day involving shares from approximately 215 listed companies.
The week began on a negative note, with NEPSE declining by 2.79 points on Sunday to close at 2,609. Despite the drop, the trading volume increased compared to the previous day. The market saw a turnover of Rs 8.5 billion, with more than 169 million shares traded across 309 companies. On Monday, the market reversed its losing trend, rising by 19.30 points to 2,628.36. However, turnover fell slightly to Rs 7.35 billion with 324 companies participating.
Tuesday marked a significant boost for the market. With news of a consensus between major political parties on Dr. Poudel’s appointment, NEPSE surged by 49.09 points to close at 2,677.45. The index fluctuated within a 64-point range, reaching as high as 2,681.58. Turnover remained steady at Rs 7.31 billion, with over 168 million shares traded from 310 companies. Later that day, the Council of Ministers officially appointed Dr. Poudel as governor.
On Wednesday, despite the positive momentum, the market closed lower. NEPSE fell by 7.94 points to 2,669.51, with the index fluctuating within a wide 100-point range. Pressure from sellers led to the drop, although the trading volume spiked to Rs 10.69 billion, with more than 230 million shares traded in 88,000 transactions across 316 companies.
The week ended on a positive note. On Thursday, NEPSE gained 19 points to close at 2,688.55. The index moved between 2,669.58 and 2,705.56 during the day. Although the market closed higher, turnover declined slightly to Rs 9.82 billion, with over 223 million shares traded in nearly 87,000 transactions from 314 companies.
The performance of the stock market throughout the week has clearly reflected the investors’ optimism following the appointment of the new central bank governor.
The market is now closely watching Dr. Poudel’s upcoming policy directions, particularly the new monetary policy, which is expected to further influence investor sentiment and the overall economic outlook.pa
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