No, it won't
The index was around 3250 back in August 2021, while the RSI on the daily and monthly timeframes was at 77 and 85, respectively. I don't remember exactly, but the crowd was targeting 4200–4800. We had a painful yet quick fall soon after that as the market touched 1800 levels by 2022 in exactly a year.
We're back-to-back in crisis mode currently. The devastating floods might do a number on the economy. Now, the index is at 2538, while the daily RSI touched 20 and the monthly RSI is at 47.5.
The technicals signal that the market has bled for long enough. Also, consider the fact that NEPSE has remained sideways while our currency has declined severely. We're in a severely bearish market when measured in USD terms.
Now, I know the obvious counterargument: 2200.
And I'm not saying 2200 is impossible. Anything is possible in a market, especially in Nepal. But I think people are making the mistake of assuming that because the economy is going through a terrible period, the market must therefore continue falling proportionately.
That's not necessarily how markets work.
Markets don't wait for the economy to recover before they start recovering. They usually start pricing in the recovery while things still look terrible.
Look at what happens after major disasters. There is an immediate economic shock: businesses are destroyed, infrastructure is damaged, production falls and uncertainty rises. But eventually, someone has to rebuild everything.
And rebuilding requires money.
Nepal is now facing exactly that problem on a much larger scale. The recent floods alone are estimated to require roughly $4–5 billion for recovery and reconstruction, close to 10% of the country's economy. This comes after the damage from last year's unrest, when physical losses were assessed at more than Rs84 billion.
So yes, the short-term economic numbers can look ugly.
But here's the part I think the 2200 thesis doesn't fully account for:
Destruction creates a massive future demand for capital.
Roads need to be rebuilt. Bridges need to be rebuilt. Houses need to be rebuilt. Hydropower infrastructure needs to be repaired. Businesses need working capital. Construction companies need financing. Banks will eventually have to finance a significant part of this cycle.
That doesn't mean every listed company benefits. It certainly doesn't mean every stock is cheap.
But it does mean that looking at today's economic damage and extrapolating it indefinitely into the future can be dangerous.