The stock market closed the week on a strong note, with the benchmark index posting its best weekly performance in several months. Analysts attributed the rally to growing investor optimism around festive season consumer spending and improved corporate earnings in the banking and hydropower sectors.

Trading volumes rose sharply as retail investors returned to the market after a prolonged period of caution. Brokers said increased liquidity and stable interest rates have encouraged renewed confidence, though some warned the rally could be short-lived without stronger fundamentals.

Banking stocks led the gains, followed by hydropower and insurance shares. Market watchers pointed to upcoming festival remittance inflows as a key factor likely to sustain demand for consumer goods and, by extension, related equities.

Regulators reiterated calls for investors to exercise caution and avoid speculative trading, noting that some smaller-cap stocks saw unusually sharp price swings during the week. A senior stock exchange official said monitoring systems have been strengthened to flag unusual trading patterns.

Analysts expect the market to remain range-bound in the coming weeks, with festival-linked earnings reports likely to shape the next major move.