Daily market commentary

Banking stocks propel Nepse to 20-month high

Published On: February 3, 2020 09:55 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Stocks continued to soar as the Nepal Stock Exchange (Nepse) index began the week on a highly optimistic note. Buyers were in full control of the market since the beginning of Sunday's session. After gaining over 16 points in the morning, the benchmark index dropped slightly at mid-day. Nonetheless, the index saw a steady advance in the latter trading hours closing the day 21.26 points higher at 1,346.64 points.

After dropping to around 1,275 points in the previous week, the outlook has turned fairly bullish as the index rallied by roughly 20 points in two consecutive sessions. Despite the index trading around its highest mark in over 20 months, the day's rally was fueled by heavy buying pressure seen in shares of commercial banks. Considering their weightage in the market-cap based Nepse index, further rally is highly probable. Besides, on an upbeat note, the local bourse saw a turnover of around Rs 2 billion for a second straight day.

Banking scrips led the gains with a 2.35% surge in the group's sub-index. Manufacturing & Processing and Non-Life Insurance sectors also went up by around 2% each. Further, Development Bank and Microfinance sub-indices added over 1% each. Except Life Insurance and Trading segments, all other sectors ended the day in green.

In terms of stock-wise turnover, Surya Life Insurance Company Ltd witnessed the highest volume of the day. Over Rs 101 million worth of the shares of the life insurer changed hands on the day. Secondly, Grameen Bikas Laghubitta Bittiya Sanstha Ltd posted a turnover of Rs 95 million. NIC Asia Bank Ltd, Prabhu Bank Ltd, Himalayan Distillery Ltd and Nepal Life Insurance Company Ltd, subsequently, registered transactions of over Rs 60 million each.

Three microfinance companies remained locked in the positive circuit on Sunday. Share prices of Grameen Bikas Laghubitta Bittiya Sanstha Ltd, Naya Nepal Laghubitta Bikas Bank Ltd and Mithila Laghubitta Bittiya Sanstha Ltd rallied by almost 10%. Similarly, unit price of Global IME Sammunat Scheme-1 Mutual Fund surged by 8.88%. Janautthan Samudayik Laghubitta Bikas Bank, Khanikhola Hydropower Co Ltd and Corporate Development Bank Ltd saw their share prices go up by 7% each.

On the other hand, share price of Guheshowori Merchant Bank and Finance Co Ltd slumped by 5%, followed by Synergy Power Development Ltd and Arun Kabeli Power Ltd which gave up over 4% each. Multipurpose Finance Company Ltd, Samata Microfinance Bittiya Sanstha Ltd and United Finance Ltd registered declines of over 3% each. Microfinance scrips followed suit.

In corporate space, Himalayan Distillery Ltd published its earnings results for the second quarter The beverage manufacturer net profit stood at Rs 254 million – a 36.71% rise compared to the previous year's figure. In other news, Excel Development Bank Ltd declared its dividend for the Fiscal Year 2019/20. The bank announced 17.1% bonus shares for its shareholders on Sunday.

The index formed a green candlestick reflecting bullish dominance on Sunday. The index is now trending slightly above its previous closing high of 1,343 points. Momentum indicators also suggest that the market is now gathering legs for another rally. Given that the market holds ground above the current level in the coming sessions with substantial volumes, the index might see another rally toward 1,400 points mark.

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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