NEPSE Faces Challenges

The Nepal Stock Exchange (NEPSE) witnessed a sharp decline of 31.49 points, closing at 2098 and signaling challenges within the financial sector. The decline is attributed to the ongoing struggles of financial institutions in recovering from poor loan performance during the second quarter of the fiscal year.

The majority of commercial banks are grappling with the aftermath of poor loan performances, leading to increased provision amounts and subsequent reductions in profits. Development banks are also facing losses, with some finding themselves in negative territory.

Despite earlier hopes for a potential market surge with improvements in bank values, the NEPSE had been stagnating within a specific range. The lack of improvement in the financial details of banks has now manifested in the index’s downturn.

Trading volume on the day also witnessed a decline, with shares worth 6.36 billion rupees traded on Monday, compared to the higher volume of seven billion rupees on Sunday.

Within the hydropower company group, most companies experienced a decline of up to 2.24%. This marks a notable downturn for a group that had been consistently growing for some time. However, amidst the general decline, some companies within this group managed to buck the trend, with increases of up to 10%. Notably, Upper Tamakoshi Hydropower’s share price rose from 9.46 to 9.98% on this particular day.

Out of the 307 companies traded, only 58 saw an increase in their values, while 232 companies witnessed a decline. The remaining companies remained stable. These developments underscore the current challenges faced by the NEPSE and highlight the broader economic uncertainties within the region.