Daily market commentary

Stocks retrace on profit booking after four-day gains

Published On: April 30, 2019 03:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, April 30: Stocks witnessed slightly volatile trading session on Monday as the Nepal Stock Exchange (Nepse) index swung between gains and losses.

The index climbed over 1,320 points briefly in the morning but pulled back sharply to hit 1,300 points. However, stocks recouped most of its losses in the latter trading hours.

The benchmark index ended the day at 1,310.31 points – up 4.21 points compared to the session earlier.

After adding more than 57 points in four sessions, stocks gave up some of its gains as buying pressure was mitigated by profit booking seen in the bourse. Nonetheless, the overall sentiment remains uplifted as major companies continue to publish upbeat quarterly earnings reports. Hence, the loss can be seen as a temporary correction unless major selling is witnessed.

Meanwhile, active participation was seen in the secondary market as more than Rs. 1,197 million worth of scrips were exchanged on the day.

Sub-indices turned in mixed performance on the day. Non-Life Insurance sub-index dropped 1.68 percent followed by Development Bank, Banking and Finance sub-indices which shed 0.9 percent, 0.66 percent and 0.56 percent.

Similarly, Microfinance and Hydropower sub-indices edged marginally lower. On the other hand, Trading stocks witnessed considerable strength with the group's sub-index climbing 2.24 percent. Life Insurance sub-index also surged 1.88 percent. Manufacturing & Processing, 'Others' and Hotels segments were among other advances.

Nepal Life Insurance Company Ltd registered the biggest turnover of the day as more than Rs 146 million worth of the insurer's shares changed hands. Shares of Nepal Bank Ltd were also actively traded with turnover of over Rs 112 million. Next, shares of Prabhu Bank Ltd and Neco Insurance Company Ltd posted transactions of Rs 38 million and Rs 33 million, respectively. NIC Asia Bank Ltd and National Life Insurance Company Ltd followed suit.

Mutual fund units led the day's advances. NIBL Pragati Fund and Laxmi Equity Fund saw their respective unit prices climb over 5 percent each. Oriental Hotels Ltd's stocks rose 4.8 percent, while Suryodaya Laghubitta Bittiya Sanstha saw gain of 4.66 percent. Nepal Life Insurance Company Ltd also surged 4.53 percent.

Conversely, shares of Radhi Bidyut Company Ltd tanked 7.5 percent. Everest Insurance Company Ltd also retraced 5.44 percent after a five day rally. Himalayan Power Partner Ltd dropped over 5 percent. Furthermore, Kankai Bikas Bank Ltd, United Insurance Co Ltd and United Modi Hydropower Ltd registered losses of over 4 percent each.

Among major companies publishing third quarterly earnings reports, Nepal Bank Ltd reported net profit of Rs 2.25 billion down from Rs 2.56 billion in the corresponding quarter previous year. Meanwhile, net profit of Sahara Bikas Bank Ltd grew by over 50 percent, while that of Saptakoshi Development Bank Ltd and Kamana Sewa Bikas Bank Ltd fell by 9 percent and 7 percent, respectively.

As per the ARKS technical analysis, the market formed a spinning top candlestick indicating indecision witnessed in the day's trading session. Nonetheless both Moving Average Convergence/ Divergence (MACD) and Relative Strength Index (RSI) indicate the momentum favoring bulls at present. Further, despite a loss, the market held its ground above 1,300 points mark which acts as a support for the near term.

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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