Daily market commentary

Stocks flat after 5 day long holiday

Published On: October 12, 2019 09:08 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Nepali stocks opened roughly flat after Dashain holidays amid thin trading witnessed on Thursday. Stocks wavered along the opening level in the initial trading hour before trading slightly in the green in the afternoon. Latter trading hours saw the Nepal Stock Exchange (Nepse) index pull back slightly to close the day with a marginal decline of 0.39 points at 1,149.01 points.

The session was marked by lackluster trading with both buyers and sellers showing least enthusiasm to make any major moves in the stock market. Following the major festive holiday, the daily economy is yet to revert to its standard pace. Hence, stock market, among many other sectors, remained affected with a dismal total transaction worth Rs 63 million only, the lowest multi-year volume recorded by Nepse.

Mixed sectoral performance also contributed to the broad-based index ending essentially unchanged. On the gaining side, Finance sub-index rose 0.51%, while Non-Life Insurance sub-index climbed 0.17%. Development Bank, Banking, Hydropower and Mutual Fund also eked out marginal gains. In contrast, Life Insurance segment fell the most and sank 0.89%. 'Others' stocks also struggled with the respective sub-index shedding 0.62%. Microfinance, Manufacturing & Processing and Hotels segments, meanwhile, closed slightly lower.

Though the overall market remained sluggish, Prabhu Bank Ltd's shares were heavily traded. More than Rs 25 million worth of the banks shares changed hands after it declared its dividend for the year 2018/19. As per its notice to Nepse, the bank will be distributing 16% bonus shares to its shareholders. Secondly, Siddhartha Bank Ltd registered turnover of Rs 4 million. Mahalaxmi Bikas Bank Ltd, similarly, logged in a total turnover of Rs 3.5 million. The development bank also announced its dividend on Thursday. As per the board's proposal, the shareholders will be receiving 8% stock dividend, while 9.89% dividend (including tax) will be paid in cash. Besides, mainly commercial bank stocks saw active trading.

Among advances, Goodwill Finance Co Ltd saw considerable strength with its share price rallying over 7%. Nepali Insurance Co Ltd also outperformed with a 5.28% surge. Furthermore, Bottlers Nepal Ltd and NMB Microfinance Bittiya Sanstha Ltd posted gains of almost 4% each. Mountain Hydro Nepal Ltd, Himalayan Power Partner Ltd and Sunrise Bank Ltd were among other 

gaining scrips adding over 2% each.

On the other hand, shares of Nepal Seva Laghubitta Bittiya Sanstha Ltd suffered and dropped 3.63%. Next, Api Power Company Ltd and Reliance Finance Ltd sank 2.60% each. Other losing scrips include Citizen Investment Trust, Prime Life Insurance Company Ltd and Nepal Hydro Developers Ltd which witnessed losses of over 2% apiece.

The equity index, as per the ARKS technical analysis, formed a doji candlestick reflecting lack of conviction in the secondary market. Buying and selling activity remained evenly balanced in the absence of notable volume. The holiday season effect is likely to persist in the coming sessions where the market will probably make modest moves to continue its sideways movement. Meanwhile, the market is also testing its 20-day Exponential Moving Average (EMA) resistance at around 1,150 points mark. Its breach might see some upward movement. However, for a sustainable rally to follow, a close above 1,180 points resistance is crucial.

This column is produced by ARKS Capital Advisors Ltd
(Views expressed are those of the producer and do not necessarily reflect those of this publication)

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