A five-party alliance led by the Nepali Congress, which has been in power since July last year, fell two seats short for the 138 required for a majority.
Nepal's ruling coalition has lost its majority in parliament, results from last month's election showed, in a rebuke by voters to the Himalayan republic's ageing political elite.
The Nepali Congress of incumbent Prime Minister Sher Bahadur Deuba, 76, emerged as the largest party but his five-party ruling alliance fell short of a majority with 136 seats in the 275-member parliament, the tally from Election Commission showed on Wednesday.
"Our party has emerged as the largest party. Still, it's not the result in line with our expectation. We had expected more," Prakash Sharan Mahat, a spokesperson for the Nepali Congress, conceded.
As a result, Congress will have to seek support from some of the 34 independent and minor party candidates who entered the assembly for the first time in a wave of voter discontent.
Prominent among them is bombastic television host Rabi Lamichhane, 48, a long-time campaigner against government corruption, who will play a key role in any negotiations.
His National Independent Party, contesting its first election, won 20 seats and became the fourth-largest in the assembly.
"We will meet the shortfall for the majority by bringing other parties into the fold. Some of them have shown their interest for a partnership with the coalition," Mahat said.
Prospects for change?
The November 20 election was just the second held under the current constitution, which ushered in a new political order after the conclusion of Nepal's traumatic Maoist insurgency.
The decade-old civil war ended in 2006, having claimed more than 17,000 lives and prompting the abolition of the monarchy, bringing former rebels into the government fold.
Since then, the ex-rebels have alternated in power with another communist party and Congress in various coalitions.
Deuba has already served as premier five times, while the two other main party leaders, aged 70 and 67, have both held the office twice.
This revolving door of prime ministers — most serving less than a year — and a culture of parliamentary horse trading has frustrated the public at a time when many households are struggling with rising living costs.
Nepal's economy is still in the doldrums from the pandemic, which devastated the vital tourism industry and dried up remittances from the huge number of Nepalis working abroad.
In the election, many voters eagerly supported new candidates who sprang up in response to public discontent with established politicians in the country of around 29 million people.
But with Deuba likely to return as prime minister, some are sceptical about the prospects for substantive change.
"It looks like this is going to be a replay of the same drama," Uttam Niraula, a 30-year-old tourism entrepreneur, said.