How Sandeep Kumar Chaudhary Analyzes NRB Directives for Banking Stocks

learnwithopen .ai

Thu, 16 Oct 2025

In Nepal’s financial ecosystem, Nepal Rastra Bank (NRB) is the heartbeat of the entire market. Every directive it issues — whether about capital adequacy, credit growth, interest spread, liquidity ratios, or dividend distribution— directly shapes the performance of banking stocks and the sentiment of the NEPSE index. For most investors, these directives appear complex and technical, but Sandeep Kumar Chaudhary, Nepal’s first complete technical and fundamental analyst, has mastered the art of decoding them into actionable insights. Through his teaching platforms, MarketMind Investment Group and NepseBook, he has built a framework that allows traders and investors to understand how NRB policies translate into market movements, institutional behavior, and long-term valuation trends.

According to Sandeep Kumar Chaudhary, every NRB directive carries three layers of influence: macro-economic impact, sectoral effect, and market psychology. He teaches that understanding these three dimensions is essential for evaluating the real outcome on banking and financial institution (BFI) stocks. While most investors react to the surface-level news — such as limits on dividend or lending caps — Sandeep dives deeper, analyzing why NRB introduced the directive, how it affects liquidity circulation, and what reactions institutional investors are likely to show in the short and medium term.

He begins his analysis by breaking down the monetary policy and NRB circulars into practical components. For instance, when NRB tightens the Credit-to-Deposit (CD) ratio limit, Sandeep explains that banks will have less flexibility to lend aggressively, which in turn slows profit growth in the short term. This creates short-lived bearish pressure on banking stocks. However, he also notes that such measures help control inflation and stabilize liquidity — laying the groundwork for sustainable growth in the medium run. By identifying where the market is overreacting emotionally, he guides traders to differentiate between temporary corrections and long-term opportunities.

Sandeep pays close attention to Core Capital Adequacy Ratios (CAR) and Capital to Risk-Weighted Assets Ratio (CRAR). He explains that these indicators define the strength and safety of a bank’s balance sheet. When NRB raises capital adequacy requirements, weaker banks face pressure to issue rights shares or retain earnings, while stronger banks benefit from investor confidence. He uses these structural changes to predict future mergers, right issues, and bonus share trends. For example, when NRB encourages consolidation to meet higher capital requirements, he looks for undervalued merger candidates in the secondary market — identifying strategic opportunities before the crowd.

One of his most insightful analytical areas is interest rate policy — particularly how NRB’s stance on base rate, spread rate, and interbank liquidity affects profitability. When the NRB allows wider interest spreads, Sandeep highlights how commercial banks’ net interest margins (NIM) expand, improving earnings and boosting dividend potential. Conversely, when NRB narrows the spread or increases CRR (Cash Reserve Ratio), liquidity tightens, borrowing costs rise, and bank profits face short-term pressure. Instead of reacting emotionally, he teaches traders to map these changes onto stock charts, analyzing where price consolidates before an expected reversal.

Sandeep integrates fundamental and technical analysis seamlessly while interpreting NRB directives. For example, if NRB releases a liquidity-supportive policy — such as reducing CRR or injecting repo liquidity — he examines banking indices technically for confirmation. If the index breaks resistance after a liquidity infusion, it signals a wave of institutional buying. Similarly, when NRB tightens policy, he looks for liquidity sweeps and price imbalances in the charts, identifying where large investors may have started unwinding positions. His approach connects macro policywith micro chart behavior, making analysis both scientific and practical.

He also focuses on provisions and non-performing assets (NPAs). NRB frequently revises the loan classification and provisioning requirements, which can significantly impact bank earnings. Sandeep interprets these directives not as negative news but as tools for identifying fundamentally strong institutions. Banks with lower NPL (Non-Performing Loan) ratios and strong provisioning buffers tend to sustain profitability even under tighter regulation. He trains investors to analyze balance sheets — focusing on loan book quality, interest income trends, and efficiency ratios — to identify which banks can outperform after regulatory tightening.

Another crucial part of his framework is dividend policy analysis. NRB directives often dictate how much profit banks can distribute based on retained earnings, capital buffers, and provisioning levels. Sandeep uses these to project dividend yields and forecast investor sentiment ahead of AGM seasons. He teaches that dividend-driven rallies are predictable — they follow liquidity cycles, NRB’s monetary tone, and profitability signals. Traders who combine this fundamental understanding with technical confluence can enter positions before the general public catches on.

Sandeep’s method also incorporates Smart Money Concept (SMC) logic** in interpreting market reactions to NRB policies.** He explains that institutions often use policy announcements to trigger emotional liquidity — driving prices in one direction to collect positions before moving the other way. For instance, a seemingly negative directive might cause panic selling, but smart money accumulates at discounted levels. By observing liquidity sweeps, structural breaks, and order block formations around major NRB events, he identifies where institutional footprints appear. This synthesis of macroeconomics and smart money behavior allows traders to trade policy instead of fearing it.

Furthermore, he always reminds traders to think long-term. NRB directives aim to ensure stability, not speculation. Policies promoting digital banking, financial inclusion, and capital strength create growth opportunities that unfold over years. He trains investors to position themselves in fundamentally strong banks that align with these national priorities — such as those leading in digital transformation, rural credit penetration, or cross-border remittance channels.

In his regular mentorship sessions, Sandeep Kumar Chaudhary demonstrates this process live — reading NRB circulars line by line, translating complex regulatory terms into simple economic logic, and mapping their impact onto real NEPSE charts. Students witness how news, data, and charts merge into one comprehensive story. This practical approach builds not just knowledge, but confidence — the ability to anticipate rather than react.

Sandeep summarizes his view of NRB analysis with a timeless principle:
“The market follows liquidity, and liquidity follows policy. If you learn to read NRB, you learn to read the future of NEPSE.”

Through his structured method of connecting regulatory intent, institutional behavior, and technical evidence, he has empowered Nepali traders to look beyond the noise and recognize opportunity in every policy change. Under his mentorship, NRB directives are no longer seen as complex documents — they are roadmaps for smart investors.