Daily market commentary

Nepse extends gain for third straight day

Published On: February 13, 2020 09:56 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: After crossing 1,350 points mark in the morning on Wednesday, the Nepal Stock Exchange (Nepse) index succumbed to some selling pressure and pulled back to its opening level at around 1,141 points within the first hour. Nonetheless, the index held ground in the positive territory throughout the session to finally 4.6 points higher at 1,345.97 points.

The index seems to have lost some steam after Tuesday's 17-point jump, but the overall sentiment still remains bullish. Despite slowing momentum, the index continued to inch toward its 21-month high. Active trading also suggests investors taking significant long position, absorbing the selling pressure in the process. The bourse recorded a turnover of Rs 1.5 billion for a second consecutive day. With insurance and microfinance sectors seeing record volumes in recent sessions, the respective stocks have continued to drive Nepse higher. On the other hand, Banking stocks have lost shine due to slightly subdued growth in earnings in the second quarter. 

Most of the sectors ended the day in positive territory, while Hydropower, Development Bank and Banking segments seeing modest correction. Microfinance scrips continued to lead as the group's sub-index jumped by 2.45%. Further, Trading, 'Others' and Non-Life Insurance sub-indices advanced over 1% higher. All other sectors climbed into the green territory.

Shares of Citizen Investment Trust were traded heavily in the bourse as reflected by a turnover of almost Rs 100 million. Shivam Cements Ltd closely followed with a turnover of Rs 98 million. NIC Asia Bank Ltd, Swarojgar Laghubitta Bikas Bank Ltd and NMB Bank Ltd posted turnovers of Rs 62 million, Rs 50 million and Rs 43 million, respectively. Insurance scrips were also traded actively in the secondary market.

Stock prices of three companies hit the upper circuit of 10% on the day. Central Finance Co Ltd, Gurans Laghubitta Bittiya Sanstha Ltd and Sparsha Laghubitta Bittiya Sanstha Ltd saw their share prices go up by over 9%. Next, Swadeshi Laghubitta Bittiya Sanstha Ltd and Kalika Power Company Ltd added 8% on their respective share prices. Green Development Bank Ltd, Laxmi Laghubitta Bittiya Sanstha Ltd and Citizen Investment Trust also followed suit.

United Modi Hydropower Ltd, on the other hand, saw its share price sink 3.53%. Jyoti Bikas Bank Ltd and Barun Hydropower Co Ltd, similarly, gave up more than 3% each. Other major decliners include Nepal Finance Ltd, Janaki Finance Ltd, Himalaya Urja Bikas Company ltd and Progressive Finance Ltd all of which lost over 2%.

ARKS technical analysis indicates the market forming a bullish candlestick with a long upper wick. Despite the index closing higher, some selling pressure was evident as the index traded close to its resistance at 1,350 points. While Moving Average Convergence Divergence (MACD) suggests a short term bearish signal, the Relative Strength Index (RSI) shows the market gaining momentum. Hence, following mixed signals, investors should trade cautiously at the current zone. A breach of the resistance might make way for the index to climb to a fresh high. On the other hand, a break of immediate support at 1,320 points can see the index fall to 1,300 points.

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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