Kathmandu-Nepal’s secondary share market, established in Magh 2050 BS through the Nepal Stock Exchange, has fluctuated since then, especially during election years.

Many investors believe the market reacts positively to increased election activity. In recent elections, the market showed a positive response, but this time, the reaction remains uncertain.

The NEPSE index, which started at 100 points in Magh 2050 BS, reached a peak of 2,654.93 points on Thursday, Falgun 14, 2082 BS. It had climbed to 3,199.03 points on Bhadra 2, 2078 BS, but since then, it has mostly declined with some fluctuations.

Before the election, stock trading will be limited to Falgun 17 Sunday and Falgun 19 Tuesday due to public holidays.

Analysts attribute the market’s cautious behavior to uncertainty surrounding potential mixed election results. They believe the market’s direction will depend on the new government and the finance minister after the election.

Despite economic improvement, with increased foreign exchange reserves, a strong balance of payments, and improved remittance inflows, the market only rose by 12.83 points last week, below expectations. In contrast, the market fell by 28.91 points during the previous week when trading was limited to two days.

Only six days remain before the election, scheduled after the Genz movement of Bhadra 23 and 24. The market continues to be sluggish, and analysts are questioning whether the potential election outcomes are influencing this trend.

Active investors suggest that the market may have already shown an early reaction, citing election rallies and visible political waves as potential factors influencing investor sentiment.

The Rastriya Swatantra Party promises to replace existing practices with a new system if elected. Investors are uncertain about their place in the potential new economic order, leading many to hold their positions.

Recent signals indicate growing investor disappointment due to market volatility and the lack of excitement in the election atmosphere.

Analysts predicted steady growth alongside election activity, but this growth has not materialized. Investors remain cautious and prefer a wait-and-see approach.

Impact of Elections on Stock Market

After the 2051 BS election, the market declined slightly. However, it rose before and after the 2056 BS election.

Before the election announcement in Jestha 2056 BS, the market saw an increase. The index rose from 190 points to approximately 206 points by the end of 2055 BS. After the Nepali Congress formed a majority government in 2056 BS, the market continued to rise, reaching 519.33 points in 2057 BS.

However, the market declined as the Maoist conflict intensified, causing the NEPSE to drop to 198.44 points in 2058 BS. The market then experienced a sharp recovery during the Constituent Assembly election in 2064 BS.

Before the 2064 BS election, the NEPSE stood at 355.60 points. After the election, it reached 683.95 points. At that time, analysts speculated that substantial amounts of informal money entered the market following the Maoist conflict’s resolution.

This influx contributed to growth in real estate and the stock market for several years after 2064 BS.

The market experienced fluctuations before and after the second Constituent Assembly election in 2070 BS. Before the election announcement, the NEPSE index stood at 389.74 points. After the announcement, it rose to 518.3 points.

At the end of Ashar 2072 BS, the index reached 961.23 points. It then hit a record high of 1,881.45 points on Shrawan 12, 2073 BS. However, the market did not show any significant growth during the 2074 BS election.

During that election, the CPN Maoist and CPN UML alliance contested together and secured nearly two-thirds of the seats. Despite this, the election did not positively impact the market. The NEPSE index stood at 1,520.2 points before the election and dropped to 1,286 points by Falgun 2074 BS.

In fiscal year terms, the NEPSE index reached an all-time high of 3,199.03 points on Bhadra 2, 2078 BS. However, market enthusiasm remained low during the 2079 BS election.

The index fluctuated around the 1,900 point level due to uncertainty over government formation, which affected investor sentiment. By the end of FY 2079-80, the market stood at 2,097.10 points.