NEPSE shuts down within minutes after a steep sell-off

Nepal’s stock market experienced an expected trading halt on Thursday after a rapid decline in the NEPSE index triggered three successive circuit breakers—automatic mechanisms designed to pause trading during periods of high volatility.

After the destructive incidents on 8 and 9 September, the stock market reopened but faced three consecutive negative circuit breakers, leading to a complete halt in trading for the day.

Within just two minutes of opening, the NEPSE index dropped by 4%, triggering the first circuit breaker. Trading was then suspended for 20 minutes in an attempt to cool the market. After resuming, the market fell an additional 1%, leading to a second circuit breaker at 11:23 AM. This caused a 40-minute trading halt.

When the market reopened at 12:04 PM, it declined by another 1%, activating the third circuit breaker and resulting in a complete suspension of trading for the day.

With this 6% drop, the NEPSE index fell by 160 points settling at 2,511. Only about four minutes of actual trading took place, with a total turnover of NRs 728.7 million. This is a drop by 86% compared to the turnover of NRs 5.2 billion in the previous session (8 September).  

On Thursday, prices of a total of 217 companies fell, with nine companies closing in the green.

The plunge reflects investor uncertainty and lack of confidence in the market following recent events, though it remains to be seen whether this signals a longer-term trend.

According to a prominent investor, “It is panic selling triggered by the Gen Z protest and negative sentiment in insurance and hotel sectors. The market's future outlook is tied to macro factors: lower interest rates and excess liquidity favour a rebound. If political stability improves under the current interim and new government, a V-shaped recovery is possible.”