Daily Market Commentary

Nepse ends higher after hydro sector rally

Published On: July 27, 2021 10:09 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 27:  The Nepal Stock Exchange (Nepse) opened with a sharp dip with weakness seen in banking stocks. Nepse tanked close to 3,000 mark before a recovery pulled the index towards the opening level at mid-day. With sustained strength seen in energy stocks, the bourse continued to see a steady advance in the latter trading hours of Tuesday’s session. The benchmark ended with a gain of 29.23 points at 3,079.66. 

The equity market saw strength despite BFIs facing strict policy from Nepal Rastra Bank (NRB) regarding provisions on loans. The mandatory provision of 1% of total credit was hiked to 1.3%, which could see banks posting a lower than expected earnings this year. Nonetheless, with bullish momentum prevailing, investors took buying positions on BFIs helping such stocks to hold ground. Meanwhile, hydropower sector as a whole helped the index notch a fresh high at around 3,080. 

Microfinance sector suffered the most as the sub-index dipped 2.06%. Hotels & Tourism, Banking and Trading sub-indices also ended the day in red. All other sectors ended the day in positive territory led by hydropower group, which rose 3.75%. ‘Others’, Investment and Finance sub-indices rose more than 2% each. All other segments saw modest gains. 

NIC Asia Bank Ltd and Api Power Company Ltd were the most actively traded stocks of the day. The respective shares saw turnovers of half a billion rupees each. United Modi Hydropower Ltd, Sanima Mai Hydropower Ltd and National Hydropower Company Ltd were the other top turnover stocks. Nabil Bank Ltd, Himalayan Distillery Ltd, Arun Valley Hydropower Company Ltd and Nepal Bank Ltd were among other heavily traded shares. 

Multipurpose Finance Ltd, Khanikhola Hydropower Co. Ltd, United Modi Hydropower Ltd and Nepal Hydro Developers Ltd shot up by 10% each. Besides, mainly energy and finance scrips dominated the list of gainers. 

Microfinance stocks suffered the most. Support Microfinance Bittiya Sanstha Ltd, Unnati Sahakarya Laghubitta Bittiya Sanstha Ltd and Janautthan Laghubitta Bittiya Sanstha Ltd fell more than 4% each. Swabhimaan Laghubitta Bittiya Sanstha Ltd, Samata Laghubitta Bittiya Sanstha Ltd, Mahuli Samudayik Laghubitta Bittiya Sanstha also suffered declines of more than 3% each.

As per the ARKS technical analysis, the index formed a small bullish candlestick suggesting extension of the uptrend. However, with Relative Strength Index (RSI) entering overbought territory, some caution must be taken before taking any notable buying positions. Some consolidation or correction is also likely in the current juncture with Nepse’s immediate support at 3,000 mark.

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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