The Nepal Stock Exchange (Nepse) index fell this week as the post-budget rally lost momentum, with investors booking profits after the federal budget failed to provide fresh triggers for sustained gains. The benchmark index declined 26.69 points, or 0.96 percent, to close at 2,755.41, down from 2,782.10 the previous week, as the “buy the rumour, sell the fact” pattern played out in the immediate aftermath of the announcement.

Market capitalisation also contracted, falling to Rs4.701 trillion from Rs4.746 trillion, wiping out around Rs45 billion in investor wealth over five trading days. The decline reflected a broader reassessment of fiscal measures and near-term market direction by investors.

Key market indicators also weakened. The Sensitive Index, which reflects Class ‘A’ stocks, fell 3.52 points to 471.99, while the Float Index declined 1.09 points to 187.87 and the Sensitive Float Index slipped 0.66 points to 159.66.

Liquidity and trading activity slowed sharply as investors turned cautious. Market turnover data showed a clear cooling in daily trading activity after the budget announcement, indicating a shift to a wait-and-watch approach among both institutional and retail participants.

Ahead of the budget, the market recorded Rs16.87 billion in turnover over a shortened three-day trading week, with a daily average of Rs5.62 billion. In the following full five-day week, total turnover rose to Rs26.95 billion, but the daily average eased to Rs5.39 billion, pointing to weaker per-day activity despite higher cumulative volume.

Market analysts said a falling market, accompanied by relatively high turnover, indicated sustained selling pressure, which could further affect short-term sentiment.

Sector performance was mixed but broadly negative, with nine of the 14 subindices ending in the red. The Trading subindex led losses, falling 6.98 percent to 3,537.66 points, followed by Hydropower and Manufacturing and Processing, both down 2.72 percent. The Banking subindex declined 1.20 percent to 1,452.22 points. Hotel and Tourism and Investment also ended lower.

Market analyst and former banker Jagannath Dhungel said the government’s plan to offer shares of Bishal Bazar Company to the public affected sentiment, pressuring the stock and dragging the broader trading sector due to its high market weight.

In contrast, the Finance subindex rose 6.91 percent to 2,550.27 points, while Non-Life Insurance gained 4.65 percent and the Others index advanced 3.23 percent. Dhungel said insurance stocks were boosted after the budget doubled third-party motor insurance coverage to Rs1 million from Rs500,000 and made insurance mandatory for building design approvals in urban areas, both of which are expected to lift premium income.

Ankhu Khola Jalvidhyut Company led turnover with Rs2.217 billion in weekly trades, even as its share price fell 6.14 percent to Rs413. Nepal Reinsurance Company followed with Rs1.093 billion turnover, while its stock surged 17.45 percent to Rs1,070. Ridi Power ranked third with Rs936.30 million.

Kalinchock Hydropower was the week’s top gainer, soaring 101.06 percent to Rs757.60 and hitting its 52-week high. Central Finance also posted strong gains, rising 24.78 percent to Rs630.

On the losing side, Bungal Hydro fell 16.75 percent to Rs700.10, while Ridge Line Energy and Hotel Forest Inn declined 13.67 percent and 10.33 percent respectively.

Dhungel said the recently announced budget is likely to have a positive medium-term impact on the market in the fiscal year 2026-27, but stressed that execution will be decisive. He added that immediate momentum is limited due to the absence of near-term catalysts.

He also noted that large investors remain cautious amid concerns over possible money laundering investigations, limiting fresh inflows. However, he said June and July are typically supportive months for equities, driven by dividend announcements from listed companies.