Daily market commentary

Bearish Nepse at 1, 197.75 points

Published On: August 29, 2019 07:25 AM NPT By: Republica  | @RepublicaNepal

The Nepal Stock Exchange (Nepse) index traded in green in the initial trading hour on Wednesday. Nonetheless, the index gave up its earlier gains as stocks remained under constant pressure in the remaining trading hours. The broad slump saw the benchmark index tumble 10.26 points to settle at 1,197.75 points.

Following the day's losses, the index marked a fresh 4 month low. Consequently, August's sell off has stretched further as the selling pressure is yet to subside. Bearish sentiment has dominated the market with energy and insurance sector suffering the most in the previous month.

Meanwhile, the bourse continues to witness series of bland trading sessions. Rs 372 million worth of shares changed hands on the day with RMDC Laghubitta Bittiya Sanstha Ltd Promoter Share accounting for more than 28 percent of the day's total activity.

All major sectors closed the day lower with Hydropower, Life Insurance and 'Others' sectors leading the losses. The respective sub-indices tanked over 1 percent each. Despite few commercial banks declaring dividends on the day, banking segment failed to hold ground with the group's sub-index shedding 0.87 percent. Non-Life Insurance sub-index closely followed with a loss of 0.8 percent. Besides, all other sectors closed marginally lower.

Among ordinary shares, Kumari Bank Ltd registered the highest turnover in the day. More than Rs 35 million worth of the bank's shares changed hands after the bank declared 10 percent stock dividend to its shareholders. Similarly, NIC Asia Bank Ltd's shares were also actively traded with turnover of over Rs 32 million. The bank also declared dividend on the day which includes 10 percent bonus shares and 11.05 percent cash payout. Prabhu Bank Ltd, Agriculture Development Bank Ltd and Nepal Bank Ltd were among other top turnover scrips.

Sabaiko Laghubitta Bittiya Sanstha Ltd continued to rally as it hit upper circuit of 10 percent on Wednesday. Similarly, recently listed Adhikhola Laghubitta Bittiya Sanstha Ltd's shares jumped over 4 percent. Himal Power Partner Ltd climbed over 3 percent, while United Finance Ltd and Everest Insurance Co Ltd posted gains of over 2 percent each.

On the other hand, Dibyashwori Hydropower Ltd was the worst performer in the exchange. Its share price tanked nearly 5 percent. Further, Samudayik Laghubitta Bittiya Sanstha Ltd & Himalayan Distillery Ltd shed 3.64 percent and 3.48 percent, respectively. Samudayik Laghubitta Bittiya Sanstha Ltd declared 34.45 percent bonus shares on the day. The microfinance has also put forward a proposal to issue 50 percent right shares as per its notice to Nepse.

National Hydropower Company Ltd, Rasuwagadhi Hydropower Company Ltd and Ankhu Khola Jalvidhyut Company Ltd's shares also suffered notably as each scrip closed over 3 percent lower.

ARKS technical analysis indicates the index forming a bearish candlestick on the daily timeframe as the index fell below psychological 1,200 points mark. Hence, bears are in significant control in the present context. Relative Strength Index (RSI) is still trending in oversold zone as the market continues to witness constant downtrend. Given the index fails to revert back above 1,200 points mark, the equity market can be expected to falter further. On the other hand, a rebound from the current range with increasing volumes might signal a reversal for the short 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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