Daily Commentary: Buyers overwhelm Nepse on second day of post-lockdown relaxation trading

Published On: June 30, 2020 09:00 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, June 30: Nepse witnessed one of its best days since March as the pandemic fear among investors seems to have subsided fairly. Sentiment remained positive since the opening of Tuesday’s trading.

After trading flat initially, a steady surge in the morning saw the Nepal Stock Exchange (Nepse) index hit its first circuit breaker limit at positive 4 percent in the first trading hour. Subsequently, trading was suspended for 20 minutes. Nepse hit another circuit limit of positive 5 percent in the second hour after brief trading, forcing another 40 minutes trading halt. Finally, as the market resumed for the second time at mid-session, the index rose another 1 percent hitting 6 percent daily threshold to end the session for the day. Nepse accumulated over 72 points to close the day at 1,260.75 points.

After ending slightly in the red on Monday, investors found some respite as the much dreaded slump was not visible in the day after. Hence, investors’ confidence found some ground as reflected by Tuesday’s upbeat trading. With some still apprehensive on entering the market, entry of new investors and investors who were sitting on majority cash accompanied by absence of major sellers in low prices has contributed to the day’s surge. However, some uncertainty still looms over the long term prospect of the equity market as the worldwide pandemic is yet to show signs of easing. Market activity also remained moderate considering a total turnover of Rs 227 million in the truncated trading session.

Shares of Himalayan Distillery Ltd was the most actively traded stock of the day as over Rs 36 million worth of its shares changed hands. Shares of Nepal Life Insurance Company Ltd closely followed with a turnover of Rs 35 million. Sana Kisan Laghubitta Bittiya Sanstha Ltd and Shivam Cements Ltd, meanwhile, saw turnovers of Rs 16 million and Rs 12 million, respectively. Nepal Reinsurance Company Ltd, NMB Bank Ltd and Nabil Bank Ltd were among other active stocks.

On the gainers front, 6 companies surged exactly 10 percent including Citizen Investment Trust, Asian Life Insurance Company Ltd, Surya Life Insurance Company Ltd, Nepal Life Insurance Company Ltd, National Life Insurance Company Ltd and Shivam Cements Ltd. Salt Trading Corporation Ltd, Vijaya Laghubitta Bittiya Sanstha Ltd and Himalayan Distillery Ltd closely followed with gains of over 9 percent each.

On the other hand, Nepal Reinsurance Company Ltd and Oriental Hotels Ltd suffered the biggest losses of the day as both slumped almost 10 percent. Sanima Equity Fund dropped 3.89 percent, Best Finance Company Ltd dipped 2.27 percent and NIBL Samriddhi Fund 1 sank 2 percent on the day.

On the technical front, the index charted a bullish reversal pattern on the day with the formation of a strong bullish candlestick. At the same time, technical indicators also show the market gaining momentum and favoring further upside moves. However, investors must play the current market with some caution as volatility can be expected to persist in further sessions. The index is also currently resting at its resistance of 1,260 points. Hence, a move towards either side backed by notable volume can suggest a further course of 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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