Nepal Rastra Bank’s freshly announced monetary policy for the upcoming fiscal year was initially hailed as investor-friendly. Among the highlights was the increase in the personal margin lending limit from Rs. 15 crore to Rs. 25 crore—a move many believed would inject liquidity and confidence into the stock market.
The policy also hinted at revisiting the 15% dividend cap on microfinance institutions and allowing capital-deficient banks and financial institutions to increase capital with central bank approval. These decisions were seen as direct support to the market, while other factors such as the policy rate and interest rate corridor were expected to help indirectly.
Investors were quick to react positively, expecting the market to surge once trading resumed. On Sunday (the first trading day after the policy was announced), the NEPSE index jumped during the pre-open session, climbing 35.72 points to reach 2,767.53. This was a notable rise from Thursday’s close of 2,731.80.
By the end of Sunday’s trading session, the index had settled slightly lower at 2,760.80—up 29 points overall. Out of 13 sub-indices, 8 closed higher. Microfinance stocks rose the most, gaining 3.50%, followed by banking stocks with a 3.45% increase. Development banks, finance companies, and mutual funds also saw gains. However, hydropower, investment, non-life insurance, others, and trading subgroups ended slightly in the red.
Despite some early excitement and optimism, Monday’s trading turned out to be a sharp reversal. The index fell consistently throughout the day, ultimately closing down 35.09 points at 2,725.71—erasing all of Sunday’s gains and more.
Banking stocks, which had surged on Sunday, were down 2.46% on Monday. Microfinance stocks also faced correction. The rapid change left many investors disillusioned, likening the situation to the Nepali saying “Machha machha bhyanguto” — implying high hopes followed by an anticlimactic outcome.
Still, some investors remain optimistic, interpreting Monday’s decline as a natural correction rather than a trend reversal. Selling pressure was also attributed to brokers and mutual funds settling their accounts, which may have triggered forced sell-offs.
Ultimately, whether the monetary policy is truly beneficial or just a short-lived boost will be revealed in the trading days to come. But for now, the sudden turnaround has left investors guessing—and cautious.
