The Nepal Stock Exchange (NEPSE) witnessed a decline this week as investor sentiment remained weak amid political uncertainty and recent high-profile arrests.

The benchmark index closed at 2,731.94 points on Thursday, down 13.71 points or 0.50 percent from last week’s close of 2,745.65.

The Sensitive Index, which tracks blue-chip stocks, posted a marginal gain of 0.05 percent, while the Float Index declined 0.42 percent.

Investor wealth shrank by Rs23 billion over the five trading days. Total market capitalisation fell from Rs4.682 trillion last week to Rs4.659 trillion this week.

Analysts said the decline reflected cautious market sentiment, with investors moving away from high-cap sectors such as hydropower and hotels.

Despite the fall in the benchmark index, trading activity remained relatively strong. Weekly turnover reached Rs18.474 billion, with average daily turnover standing at Rs3.69 billion.

Compared to last week’s turnover of Rs17.121 billion, trading volume increased by around 7.9 percent.

Market analysts said investors were selling shares to book profits during brief market gains.

Most sectoral indices ended lower during the week. The Hotel and Tourism sector recorded the biggest decline, dropping 1.79 percent or 142.04 points. The Others sector fell 1.52 percent, Finance declined 0.98 percent, and Development Banks slipped 0.80 percent.

The Trading sector emerged as the top gainer with a 0.95 percent rise, followed by Non-Life Insurance, which edged up 0.33 percent.

SY Panel Nepal Limited led the market in turnover, recording transactions worth Rs863.2 million. Himalayan Reinsurance followed with Rs645.4 million in turnover.

Sahas Urja posted the highest gain of the week, rising 5.45 percent to close at Rs662 per share.

Ridge Line Energy Limited was the biggest loser, with its share price falling 14.79 percent to Rs997.

National Hydro Power recorded the highest trading volume, with 2.019 million shares changing hands during the week.

Market analyst Ajaya Singh Thapa said the market was unlikely to witness a major movement in the near term as investor confidence had weakened following recent arrests of high-profile figures.

“Investors are hesitant to invest in the secondary market due to uncertainty and the latest political developments,” he said.

He added that the market could still witness short-term fluctuations ahead of the upcoming budget announcement.

Chartered accountant and market analyst Manish Aryal said the market was consolidating above the strong support zone between 2,680 and 2,700 points, which he viewed as a positive sign despite prevailing negative sentiment.

“I do not see the market breaking below the 2,680 level. I believe the market will react positively to the upcoming budget,” Aryal said.

Aryal said lower trading volumes in recent weeks indicated that investors were in a wait-and-watch mode.

“They are looking for an opportunity to enter,” he said.