KATHMANDU, Nov 7: The equity market opened the week with a modest loss. After dropping 4.73 points on Sunday, the Nepal Stock Exchange (Nepse) index saw further loss of 3.32 points on Monday. The benchmark saw some strength at mid-week and recouped 5.41 points on Tuesday. Further, Wednesday and Thursday witnessed declines of 2.24 points and 4.47 points. Overall, the index shed 9.50 points or 0.58% in the review period to finish at 1,636.17.
After two weeks of trading ahead and after festive holidays where the index added more than 80 points, this week saw series of calm trading sessions where the benchmark hovered along 1,640 points line. Hence, the rally lost some steam on the back of profit booking. However, selling pressure has remained subdued making a substantial correction highly improbable. Market participation also remained upbeat as over Rs 12 billion worth of shares were traded in the week on review. 
Most of the sectors ended in green while the heavyweight banks dragged the index lower. Banking sub-index fell 2.93% followed by Development Bank segment, which registered a 1.40% decline. Meanwhile, Manufacturing & Processing and Life Insurance sectors saw minor dips. On the other hand, Trading segment outperformed the broader market by a notable margin. The group’s average rallied 10.5%. Microfinance and Hydropower sectors also saw strength and closed over 3% higher. Mutual Fund and ‘Others’ sub-indices rose more than 2%. Non-Life Insurance, Finance and Hotels sectors ended in green.
In terms of active stocks of the week, Prime Commercial Bank Ltd’s shares were traded the most after the commercial bank reported more than 50% growth in its first quarter earnings. Over Rs 660 million worth of its shares were traded. Api Power Company Ltd, Shiva Shree Hydropower Ltd and Hydroelectricity Investment and Development Company Ltd posted turnovers of Rs 462 million, Rs 416 million and Rs 382 million. Arun Kabeli Power Ltd, NIC Asia Bank Ltd, Prabhu Bank Ltd and Nepal Bank Ltd’s shares were also heavily traded. 
This week, sentiment remained mixed after another heavyweight bank declared a lower dividend relative to the past fiscal year. Everest Bank Ltd proposed a dividend of 10.53% including 5% bonus shares and 5.53% cash payout. In the week earlier, Standard Chartered Bank Ltd announced 11.84% dividend constituting 7% stock dividend and 4.84% cash dividend. Both stocks being some of the highly priced commercial banks saw notable selling pressure after respective announcements, which weighed on the overall banking sector’s average. Meanwhile, upbeat first quarter financial reports from Prime Commercial Bank Ltd and few microfinance companies kept the losses in check. However, indecisiveness still prevails where upcoming financial reports and dividend announcement will likely be key in determining possible move of the equity market in the weeks ahead. 
As per ARKS weekly technical analysis, the market formed a small bearish candlestick reflecting a minor retracement after two weeks of gains. Hence, some more correction seems likely despite the overall market trend pointing upwards. Momentum indicators also reflect buyers in control. While some correction is also probable, 1,600 point’s mark can act as a strong support for the equity market.
This column is produced by ARKS Capital Advisors Ltd.
www.arkscapitaladvisors.com
(Views expressed in the article are those of the producer and do not necessarily reflect those of thispublication)

 
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