Daily Commentary: Volumes dip as stocks end Thursday flat

Published On: September 4, 2020 07:56 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 4: After opening around 15 points higher in the morning on Thursday, the Nepal Stock Exchange (Nepse) index pulled back sharply to trade below 1,500’s level within the first hour. However, stocks recouped the morning losses and swung between gains and losses  in the afternoon to finally end the day on a flat note. At the close, Nepse stood at 1,510.42 – down a modest 0.15 points compared to Wednesday’s session.

The equity index, which has been witnessing a steady surge since mid-August, took a breather on Thursday on profit booking. Meanwhile, the exchange also saw buyers offset the selling pressure which helped index hold its ground above the crucial 1,500 mark.

Nonetheless, some cautiousness could be observed in the trading session as Thursday marked a notable dip in turnover compared to the session earlier. Turnover for the day was recorded as 2.63 billion, which was over Rs. 4 billion on Wednesday. The heedfulness can also be attributed to the impending change in the cabinet structure, which includes a decision on replacement of the current finance minister.

Some sectors corrected on the day, while others ended the day in green but movements remain minimal. Hotels index rose 2.10 % followed by ‘Others’ index which added 1.22 %. Non-Life Insurance, Mutual Fund and Microfinance sub-indices also saw moderate gains. Life Insurance and Finance sectors inched marginally higher. On the other hand, the Hydropower segment pulled back after a 3-day rally and closed over 2 % lower. Manufacturing & Processing and Trading sectors witnessed retracements of over 1 % each. Banking and Development Bank sub-indices witnessed minor losses.

Nepal Reinsurance Company Ltd has been the hot stock since the past couple of weeks. The market heavyweight saw a turnover of over Rs. 415 million on Thursday. Shares of Shikhar Insurance Company Ltd and Neco Insurance Company Ltd were also actively traded with turnovers of Rs. 130 million and Rs. 94 million, respectively. Nepal Bank Ltd, Arun Kabeli Power Ltd and Nepal Life Insurance Company Ltd were the other top turnover scrips in the session.

Unnati Sahakarya Laghubitta Bittiya Sanstha Ltd stretched its rally after a post-merger listing. The scrip shot up 10 %. Arun Kabeli Power Ltd, NRN Infrastructure and Development Ltd and Joshi Hydropower Development Company Ltd also saw strength and surged over 9 % each. Ghalemdi Hydro Ltd, Asha Laghubitta Bittiya Sanstha Ltd and Multipurpose Finance Ltd posted gains of 7.46 %, 6.17 % and 5.77 %, respectively.

Many hydropower stocks suffered on profit booking. Panchthar Power Company Ltd and Himal Power Partner Ltd were the major laggards with losses of over 6 % apiece. Ngadi Group Power Ltd and Hydroelectricity Investment and Development Company Ltd closed over 5 % lower. Kalika Power Company Ltd, Rairang Hydropower Development Company Ltd and Butwal Power Company Ltd were the other major decliners.

On the technical front, the index formed a bearish candlestick on the daily timeframe after closing below its opening level. However, the loss can be taken as a retracement unless it extends in the following session with notable volume. A further dip can see the index test its support at around 1,460 level. Meanwhile, the overall sentiment remains bullish as reflected by technical indicators. An immediate resistance lies at July’s intraday high at around 1,560 point’s mark.  

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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