Abhishek Kushwaha

The Nepal Stock Exchange (NEPSE) has gone through many ups and downs since it started. These changes, known as bull and bear cycles, show how Nepal’s stock market keeps changing over time. A bull cycle is when the market goes up, and a bear cycle is when it goes down. These cycles are influenced by how investors feel, government policies, the country’s economic condition, and global trends. Studying them can help investors understand the market better, spot opportunities, and avoid risks. Recognizing these patterns is an important step toward making smarter investment decisions.

1. The First Bull Run (1998-2000)

During this period, NEPSE went through a steep rise. From the years 1998 to 2000, it added 282.42%, setting its 408.48 points after 823 days, or just over 2 years and 3 months. The huge upward shift of the index showed more interest from new investors who were looking at the hopes of economic growth through its rise. It marked the era as new stock market investors and corporations made their presence known, heightening the activity of the market overall. It showed how good vibes and favorable investor atmosphere might work wonders and propel the market upward.

2. The Bear Decline (2000-2003)

After initial surge, there had been a sharp fall in the market. NEPSE nosedived by 65.74% (losing 354.26 points over a period of 1,278 days, approx. 3.5 years). There is a quite evident reason: market was at the over-evaluations point of time; then most the people started losing faith. The sales of shares led to further fall in prices. It was another phase that remembered people that periods of steep climb of the stock market are generally succeeded by a period of correction. Besides, it pointed to the importance of understanding market risk and preparing oneself against sudden and violent changes in investors' psychology.

3. The Second Bull Market (2003-2008)

This marked a strong return of the market, with NEPSE jumping an incredible 506.77% to reach 985.59 points in 1,644 days, approximately 4.5 years. It was one of the strongest bull runs that NEPSE has ever witnessed. The rise was propelled by more people getting involved in the stock market and friendly government policies toward investment. During this time, investor confidence improved, and the stock market was considered one of the most promising channels for wealth appreciation. This period also brought new companies and industries, giving the market a lot of diversity and making things pretty interesting for investors.

4. The Financial Crisis Impact (2008-2011)

The financial crisis worldwide, along with some local economic issues, severely brought down the market. NEPSE had fallen by 74.75% or 882.06 points in 1,187 days, which is approximately 3 years and 3 months. The stock market was very bad, and the confidence of the investors had been drained to such an extent that people drew out their money. Liquidity became so low that available cash for trading became very less, and hence, people were unable to buy or sell their shares. The slump also mirrored the overall sluggish growth and reduced business activity in the economy. It was a distressing time to see how different global and local events have taken their toll on the stock market.

5. The Resilient Recovery (2011-2016)

NEPSE recovered strongly, gaining an impressive 522.83% to reach 1,571.76 points in 1,554 days (around 4 years and 3 months). This period showed the elasticity of this stock market, which got up after all sorts of bruises. Investors started to feel confident, and more people began investing money in shares, expecting better returns. Skirmishing economic conditions and positive market trends also favored growth. Consequently, it was a time of recuperation and optimism where the market regained new participants with new opportunities for investment. This phase reminded one and all of the stock market's ability for long-term growth despite certain challenges in the recent past.

6. The Mid-Term Correction (2016-2018)

After the strong recovery, NEPSE slid down, which decreased by 42.23% and lost 797.66 points in 1,002 days or approximately 2 years and 9 months. This was the cooling-off phase after the big rally, where the market was adjusting itself. Thus, many investors began to sell their shares in order to book their profits, which resulted in lowering the prices. This phase also showed that the market couldn't go upwards and corrections are a normal part of its cycle. This was yet another signal to investors to be cautious and plan for growth as well as possible contraction in the market.

7. Recent Bull Run (2018-2022)

NEPSE again shot up to 2,025.52 points, an increase of 174.66% in just 731 days, about 2 years, backed by increased investment in the market and indications of economic recovery. In this period, investors became confident, and the stock market was seen as a great avenue for returns. This rally was also supported by various endogenous and exogenous factors, including supportive policies and improved corporate performance. The stride of this phase showed how fast a market can rebound, offering ample time for both new and veteran investors to reap the benefits of an upward trend in the market.

8. The Latest Bear Cycle (2022-2024)

NEPSE continued with another correction, losing 42.58% or 369.18 points in 640 days, i.e., approximately 1 year and 9 months. Even in the red, the trading activity remained intense as the total volume of trading reached 1.668 trillion. It showed that investors were active even during the correction phase of the market. Many also took this opportunity to buy the shares at a low price, while others opted to hold on with the hope that it would bounce back. The correction brought to light the ups and downs of the stock market and really reminded investors about the virtue of patience and long-term strategy.

Average Gains and Losses

Over the observed cycles, the average gains during bull markets and losses during bear markets are as follows:

Conclusion

The ups and downs of NEPSE show how important it is to time the market and have a good strategy. By understanding these patterns, investors can manage risks and take advantage of opportunities. Looking at the history of the market helps Nepalese investors better understand future trends, so they can make smart choices and achieve long-term success. It also teaches investors to stay patient and avoid making quick decisions based on short-term market movements. With careful planning and a clear strategy, investors can navigate the market's challenges and build wealth over time.

For more insights, stay connected with Abhishek Kushwaha, a seasoned investor and content creator passionate about financial education.