Weekly Market Commentary

Weekly dip pulls index towards April’s low

Published On: October 1, 2021 07:31 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Oct 1: After ending in green in the prior week, stocks opened with notable weakness on Sunday. On the first trading day, the Nepal Stock Exchange (Nepse) index fell around 60 points followed by back to back losses of over 70 points on Monday and Tuesday. Though the market tried to gain its footing on Wednesday with a 50-point gain, the benchmark ended the week with a decline of 32 points on Thursday. Overall, the weekly loss stood at 186.24 points or 6.61% with Nepse settling at 2,633.42.

The bourse saw highly volatile trading in the week earlier but managed to close the week in green. After failing to find support at 2,800 mark, the index stretched its downfall with another stock rout ahead of the festive season. However, volumes has dipped firmly reflecting subdued enthusiasm among both buyers and sellers. Turnover also dropped to around Rs. 26 billion in the review period.

Amidst the recent downfall, however, few banks and microfinance have continued to announce dividends which has also been key in determining the respective stock’s movement. This week, Ridi Hydropower Development Company Ltd announced its dividend for the year 20/21. The energy company announced 12.6% cash dividend to its shareholders.

Sensitive Index mirrored the broader market and fell 6.22%. Among sectors, Finance sub-index tanked 15.39% followed by Hydropower and Development Bank groups which plunged 10.20% and 9.32%. Newly formed Investment sector dropped 9.23%. Non-Life Insurance and Life Insurance stocks also came under pressure and fell around 7% on average. All sectors took a firm hit.

As per the ARKS technical analysis, the index formed a strong bearish candlestick on the weekly timeframe reflecting sellers’ control. A breach of 2,800 support mark has dragged the index firmly towards 2,600 level, which can be taken as the next immediate support. Momentum indicators also suggest possibility of further downward move on the weekly timeframe. However, a consolidation around the current zone and a volume backed rebound can provide opportunities go long in the equity market. 

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 thispublication)

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