KATHMANDU: Nepal’s stock market, NEPSE, showed signs of recovery last week as investors welcomed a new dividend policy for microfinance institutions introduced by Nepal Rastra Bank (NRB). The NEPSE index rose 32 points over the week, bringing some relief after weeks of continuous decline.
The market had been under pressure since mid-July, with the NEPSE index falling from 3,002 points to a low of 2,739.95 points by Sunday. The downward trend had weakened investor confidence, making any positive policy announcement a potential turning point.
The central bank’s new policy allows microfinance companies with a capital adequacy ratio above 12% and non-performing loans (NPLs) under 5% to distribute up to 25% of profits as dividends. Institutions with slightly lower capital ratios or marginally higher NPLs can issue 15–20% dividends.
“This policy was a long-standing demand from investors,” said market analyst Chhotelal Rauniyar. “The announcement immediately injected optimism, and we saw the impact in Monday’s trading when NEPSE jumped 21.3 points.”
The market continued to gain on Tuesday and Wednesday, adding 4.83 points and 53 points, respectively. On Thursday, however, the index dipped by 38.10 points due to profit booking after a sharp rally. “Profit booking is natural after such a spike,” Rauniyar explained. “Investors who had been cautious during the previous decline took advantage of the gains.”
The positive trend was accompanied by higher trading volume. Total turnover for the week reached Rs 33.26 billion, up from Rs 29.77 billion the previous week, signaling stronger participation from both retail and institutional investors.
Microfinance companies led the weekly gainers, with Samata Bikas Laghubitta and Sanaa Kisan Bikas Laghubitta increasing 7% and 5%, respectively. In the broader market, Vikas Hydropower recorded the highest weekly gain, surging 37.88% after its IPO shares entered secondary trading.
Despite the overall optimism, hydropower companies dominated the list of decliners. Sikles Hydropower shares fell 11.3% after closing its books for bonus shares and a small cash dividend. Analysts also pointed to ongoing disputes over dual IG numbers issued by CDS & Clearing Limited, which created uncertainty among investors in the energy sector.
Investor sentiment has been further bolstered by favorable economic indicators, low interest rates, and supportive regulatory policies. “These factors, combined with the dividend announcement, make the market more attractive,” said Rauniyar.
Long-term investors are also encouraged. Devi Prasad Dahal, a shareholder, said the policy had injected new enthusiasm among market participants. “Investors had been waiting for this move for a long time. The market is responding positively, and this week’s gains reflect renewed confidence,” he said.
During the week, 6.7 million shares were traded over 311,285 transactions, showing increased activity compared to previous weeks. Analysts believe that if economic conditions remain favorable and regulatory support continues, the market could maintain its upward momentum.
“The NEPSE rally shows how responsive the market is to policy measures,” said Dahal. “With supportive government measures and a healthy macroeconomic environment, investors can expect more opportunities in the coming months.”
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