Nepal Stock Exchange (NEPSE), widely regarded as the barometer of the country’s economic sentiment, has witnessed a staggering Rs 1.2 trillion surge in market capitalization over the span of 13 months. The growth has been attributed to a surge in investor confidence, the entry of new companies, and favorable economic indicators.
In mid-June 2024, the NEPSE index stood at 2,112.30 points, with the market capitalization recorded at Rs 3.349 trillion. Fast forward to mid-June 2025, the index reached 2,655.39 points, pushing capitalization to Rs 4.423 trillion. By July 10, the index climbed further to 2,731.80, with the capitalization hitting Rs 4.551 trillion.
According to Murahari Parajuli, NEPSE spokesperson, the rise in value rather than the volume of shares traded was the primary driver behind this expansion. “This year, NEPSE’s capitalization ranged from a minimum of Rs 3.45 trillion to a maximum of around Rs 4.80 trillion,” Parajuli stated. The peak was seen on March 2 at Rs 4.799 trillion, while the lowest point occurred earlier in the fiscal year.
Market experts, like former Investor Forum President Ambika Paudel, believe the rally reflects Nepal’s gradual economic recovery. “The market typically reacts early to shifts in economic trends. With signs of improving growth, rising imports and exports, and enhanced revenue collection, the capital market has naturally gained momentum,” he noted. Paudel added that the entry of new companies into the market and investor optimism around the new monetary policy have helped fuel the upward trend.
Data from Nepal Rastra Bank (NRB) supports this outlook. The central bank’s latest macroeconomic indicators show steady improvement: inflation remains contained, remittance inflow is strong, exports and tourist arrivals are rising, and foreign currency reserves have grown. Many economic sectors that had previously stagnated are now experiencing renewed growth.
The recently announced Monetary Policy 2025/26 has also played a role in boosting sentiment. Among the key reforms, the margin loan limit on share pledges was raised from Rs 150 million to Rs 250 million per individual, allowing investors to borrow more across institutions. With this policy, share investment is expected to increase significantly, strengthening overall market participation.
The policy’s emphasis on reducing interest rates is also seen as a tailwind for capital markets. Analysts argue that lower borrowing costs make share trading more attractive, especially when paired with ample liquidity in the banking system.
By mid-June 2025, 272 companies were listed on NEPSE. Of these, 132 belong to the banking, financial, and insurance sectors, while 91 are hydropower firms. The rest include 23 manufacturing industries, seven hotels, seven investment companies, four trading companies, and eight from other sectors.
As confidence in Nepal’s financial markets continues to build, stakeholders anticipate further gains—especially if economic stability and reforms remain on track under the new fiscal and monetary policy framework.
