Daily Market Commentary

Bearish spell continues as Nepse hits 2-year low

Published On: August 13, 2018 05:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Aug 13: : Stocks came under pressure from early trading on Sunday as the benchmark Nepal Stock Exchange (Nepse) index shed more than 10 percent in little over an hour's time. Though the index tried to consolidate mid-day, it continued the slump in the remaining trading hours to close 16.79 points lower at 1,163.94 points.

Despite liquidity situation easing in recent weeks, the stock market has not been able to take a breather from its downtrend. Further, recent earning reports from listed companies have also failed to keep the investors upbeat. Nonetheless, slight improvement in market participation was observed on the first trading day of the week as turnover rose by 27 percent to Rs 250 million.

In terms of sectoral performances, only Trading and Hotels sub-indices ended in green and were up 1.05 percent and 0.63 percent, respectively. All other sub-indices closed in red. Major weakness was visible among Life Insurance stocks as its sub-index declined by 3.35 percent. Sub-indices of Manufacturing & Processing and Microfinance groups were also down 2.95 percent and 2.09 percent, respectively. Non-life Insurance, Hydropower and Banking sub-indices also dropped over 1 percent each.

Nepal Life Insurance Co Ltd led the list of companies in terms of turnover. The bank's shares worth Rs 37 million changed hands on the day. According to Nepse, the insurer has decided to amend its promoter shareholding ratio from 70 percent to 60 percent. Accordingly, over 439 million worth of its promoter shares will be converted to ordinary shares. Similarly, Rs. 10 million worth of shares of Life Insurance Company Nepal Ltd were traded on the day. Additionally, stocks of Nepal Bank Ltd, Nabil Bank Ltd and Global IME Bank Ltd were also active on the day.

In terms of advances, Arambha Microfinance Bittiya Sanstha Ltd and Salt Trading Corporation gained over 3 percent each. Similarly, unit price of Siddhartha Equity Fund rose by 2 percent. Furthermore, Om Development Bank Ltd Promoter Share and Janaki Finance Ltd also saw their respective share prices rise over 1 percent each.

Multipurpose Finance Company Ltd was the biggest loser for the day as the Class 'D' financial institution's share price tanked 10 percent to hit the lower circuit. Likewise, Support Microfinance Bittiya Sanstha and Nerude Laghubitta Bikas Bank Ltd also tumbled close to 10 percent each. Nerude's share price declined after the company reported a 40 percent year-on-year decline in its net profit. Furthermore, share price of Nepal Life Insurance Co Ltd also took a hit and closed down 5.89 percent.

As per the financial reports for the fourth quarter of Fiscal Year 2017/18 published on Sunday, Chilime Hydropower Company Ltd reported a modest increase in its net profit, while Gurkhas Finance Ltd reported over 90 percent decline in its earnings as compared to the previous year.

Technical analysis by ARKS indicates the market continuing its bearish momentum breaching the support level of 1,180 points. As a result, the benchmark index hit a two-year low on Sunday. Technical indicators also suggest that the downtrend is likely to continue given the index fails to pullback above 1,180 points in the coming sessions.

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