Daily Market Commentary

Stocks eke modest gains to hit fresh closing high

Published On: May 24, 2021 09:33 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 24: The equity market’s benchmark opened firmly on a positive note and traded almost 30 points higher close to 2,850 in the morning. Following a small pullback, the Nepse index hovered around 2,840 at mid-session. Further, profit taking in BFIs dragged the index in negative territory in the final hour. However, the index clawed back some gains at the close, ending Monday’s session at 2,823.05 – up 3.05 points against prior trading session.

The index marked its fresh closing high on Monday adding more than 735 points in the year 2021 so far. Though the index notched a new historic level on the day, the close down around 27 points from intraday-high indicates slight loss of steam on the day driven mainly by correction in some of the sectors. However, the bourse saw record market participation on the day fueled mainly by inflow of fresh funds into the equity market. Over Rs. 13 billion worth of shares changed hands on the day. 

Most of the sectors corrected on the day despite the broad based index ending higher. Finance and Trading sectors corrected firmly registering declines of 2.2% and 1.28%. Development Bank and Manufacturing & Processing sub-indices came under pressure dropping 0.93% and 0.81%. Hotels & Tourism, ‘Others’, Life Insurance and Microfinance sub-groups also edged lower. Non-Life Insurance and Investment sub-indices, on the other hand, saw strength and registered advance of 1.37%. Mutual Fund, Banking and Hydropower sectors also finished in positive territory.

Shares of Hydroelectricity Investment and Development Company saw turnover of a whopping Rs. 1.26 billion after the investment company received approval for issuing 100% right shares from Securities Board of Nepal (SEBON). Neco Insurance Company Ltd posted a turnover of Rs. 373 million after the non-life insurer said that it will be distributing 16.32% dividend for the year 19/20. The payout includes 15.5% stock dividend and 0.82% cash dividend for tax purpose. Other active stocks of the day were IME General Insurance Ltd, Surya Life Insurance Company Ltd and Civil Bank Ltd.

Four companies remained locked in the upper circuit. Barun Hydropower Co. Ltd, United Idi Mardi RB Hydropower Ltd, Mountain Hydro Nepal Ltd and Green Development Bank Ltd all saw rallies of almost 10% each. Arun Valley Hydropower Development Co. Ltd, Hydroelectricity Investment and Development Company Ltd and IME General Insurance Company Ltd posted gains of 7.5%, 7.1% and 4.64%. 

Conversely, Excel Development Bank Ltd plunged 4.47% after a sharp rally in the past few trading sessions. Goodwill Finance Company Ltd and Central Finance Company Ltd, subsequently, saw losses of 4.37% and 4.13%. Mithila Laghubitta Bittiya Sanstha Ltd, Sindhu Bikash Bank Ltd, Samriddhi Finance Company Ltd, Janaki Finance Ltd, Pokhara Finance Ltd and Multipurpose Finance Ltd were the major decliners among others.

As per the ARKS technical analysis, the index formed a bearish spinning top candlestick on the daily timeframe. Hence, some indecision was witnessed on the day as also reflected by mixed performance on the sectoral front. Nonetheless, massive volumes suggest that buying enthusiasm is yet to subside of late. Momentum indicators also reflect buyers control but with RSI entering overbought zone, a retracement in the broader market is probable.

This column is produced by ARKS Capital Advisors Ltd.

(Views expressed in the article are those of the producer and do not necessarily reflect those of this publication)

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