Daily market commentary

Stocks retrace after optimistic rally

Published On: August 11, 2020 10:08 PM NPT By: Republica  | @RepublicaNepal

Nepse benchmark index falls 7 points 

KATHMANDU, Aug 11: After shooting up more than 10 points in the early trading session, the Nepal Stock Exchange (Nepse) benchmark corrected sharply to trade in the red in the morning. While stocks tried to gain some footing at midday and traded in green at mid-day, the benchmark index closed the day with a modest loss of 6.61 points at 1,423.81 points. 

After two straight days of gain where the index accumulated a total of around 50 points, some correction was visible amidst short-term profit booking. Meanwhile, bears also took it as an opportunity to divest considering the prices that saw a good upward movement in a couple of sessions. With turnover over Rs 1 billion for two straight sessions, market activity remains upbeat. Tuesday saw a turnover of Rs 1.27 billion.

While most sectors witnessed decent advance in the previous session, Tuesday saw those indices correct slightly. Only the Mutual Fund sector ended in green. Hotels and Trading sectors suffered the most and dropped 2.78 percent and 2.26 percent. Microfinance and Manufacturing & Processing sub-indices also fell 0.89 percent and 0.61 percent. Meanwhile, the Banking sub-index pulled back a modest 0.54 percent. All Other sectors saw minimal decline.

Shares of Nepal Reinsurance Company Ltd continued to see heavy volumes. Over Rs 121 million worth of the shares changed hands. Nepal Life Insurance Company Ltd’s shares were also traded actively with a turnover of Rs 84 million. United Insurance Company Ltd and Nepal Credit and Commerce Bank Ltd posted turnovers of Rs 47 million apiece. Besides, NMB Bank Ltd, Ajod Insurance Ltd and NIC Asia Bank Ltd were actively traded on Tuesday’s session.

Ajod Insurance Ltd and Sadhana Laghubitta Bittiya Sanstha Ltd stretched their rallies surging almost 10 percent each. Union Hydropower Ltd closely followed with its price shooting up by over 8 percent. Meanwhile, United Insurance Company Ltd and Best Finance Company Ltd registered gains of over 5 percent each. Guheshwori Merchant Banking and Finance Ltd, NIC Asia Debenture 82/83 and Ankhu Khola Jalavidhyut Company Ltd were among other major gainers.

On the other hand, National Finance Ltd corrected sharply after gaining over 50 percent in a few trading sessions. The finance company’s share price tanked 9.8 percent. Kalika Laghubitta Bittiya Sanstha Ltd and Gurans Laghubitta Bittiya Sanstha Ltd shares also struggled and closed over 5 percent lower. Other major losing scrips of the day include Nepal Seva Laghubitta Bittiya Sanstha Ltd, Karnali Bikas Bank Ltd and Arambha Chautari Laghubitta Bittiya Sanstha Ltd.

Among companies publishing their fourth quarter financials of the year 2019/20, Chilime Hydropower Company Ltd reported a modest growth in its net profit. Its earnings for the year rose to Rs 748 million from Rs 746 million in the previous year. The hydropower company’s income from sale of electricity witnessed a marginal decline against the previous fiscal year. Similarly, recently listed Ajod Insurance Company Ltd reported a decent year-on-year growth in its net profit to Rs 62 million against Rs 41 million in the year earlier. Its reported per share earnings stands at Rs 8.68.

On the ARKS technical front, the formation of a small bearish candlestick indicates corrective action prevailing on Monday’s session. Nonetheless, short-term sentiment remains bullish if the market holds ground above 1,400 point’s level. Technical indicators, meanwhile, suggests slightly neutral sentiment in the current scenario. A breakout of 1,470-1,480 points mark can see the index extend its upward rally. On the other hand, 1,400 points can act as a support for the equity market.

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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