Weekly market commentary

Nepse closes lower erasing previous week's advance

Published On: July 13, 2019 07:28 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 13: Stocks pulled back slightly on Sunday extending losses from the preceding session. The Nepal Stock Exchange (Nepse) index fell over 4 points in the day. Subsequently, the index posted further decline of 8 points on Monday. Though the index held ground and traded in the green on Tuesday with a modest 3 point advance, the index registered marginal losses on the remaining trading days. Nepse ended the week with an overall loss tally of 11.94 points or 0.95% and closed at 1,248.53 points.

The market, which witnessed subdued selling pressure in the previous week, saw its gains cut short as the market remained largely in favor of the bears in the review period. 

However, the index has continued to trend in a confined range since mid-June amid indecision among investors. Cautious trading is still visible in the equity market ahead of monetary policy announcement. The bourse witnessed a moderate turnover of Rs 2,633 million in the week. 
Class 'A' stocks slightly underperformed as reflected by 1.15% slump in the Sensitive Index. On the sectoral front, most of the sub-indices closed the day in red, while only Finance and Hydropower sub-indices eked out meager profits. Insurance scrips continued to come under the hammer with Life-Insurance and Non-Life Insurance shrinking by 1.86% and 1.59%, respectively. 

Sub-indices of 'Others', Manufacturing & Processing, and Mutual Fund segments registered losses of 1.58%, 1.5% and 1.35%. Hotels and Microfinance segments also tumbled over 1%. Meanwhile, sub-index of heavyweight Banking stocks closed the week 0.76% lower. 

Among active scrips, Civil Bank Ltd Promoter Share witnessed the highest turnover of the week as more than Rs 175 million worth of the equities changed hands. Next, shares of Nepal Bank Ltd registered total transaction worth Rs 166 million. Civil Bank Ltd, Prabhu Bank Ltd Promoter Share, and Mega Bank Ltd were also actively traded with respective turnovers of Rs 137 million, Rs 114 million, and Rs 106 million.

In the news front, Prabhu Capital Ltd concluded the allotment of Initial Public Offering (IPO) shares of Ghodighoda Laghubitta Bittiya Sanstha Ltd on Friday. 

The issuance to general public, which was worth over Rs 12 million, was considerably oversubscribed. Only 12,459 applicants, out of the total 285,565 valid applicants, were allotted 10 unit shares each.

Among major announcements, Life Insurance Corporation Nepal declared 70% dividend for its shareholders for the Fiscal Year 2017/18. The dividend includes 35.54% bonus shares and 34.46% cash payout. The life insurer has also called for its Annual General Meeting (AGM) on August 9 with approval of the aforementioned dividend as its key agenda among others. 

In the week, Nepal Credit and Commerce Bank Ltd also announced 15.89% stock dividend to its shareholders. Following the capitalization of the bonus shares, the commercial bank's capital will reach the mandatory Rs 8 billion mark.

AS per the ARKS technical analysis, the market formed a bearish candlestick on the weekly timeframe erasing the modest gain seen in the week earlier. 

Weekly momentum indicators also suggest bears gaining control of the market with both weekly Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) sloping southbound. The breach of the current support zone at 1,240-1,250 points range, hence, can indicate possibility of further downfall in the equity market.


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