Daily Commentary: Late afternoon surge pushes stocks higher

Nepse benchmark index jumps 11 points

KATHMANDU, Aug 9: Stocks saw weakness in the early hours of Sunday’s trading. Despite closing flat on Thursday, the local bourse experienced elevated selling pressure in the first hour. The Nepal Stock Exchange (Nepse) benchmark index fell as low as 1,362 points in the morning. However, with investors taking major buying positions around that level, the index staged a recovery to climb above the opening level at mid-day. Following another pullback towards red, a last hour advance saw the index close the day fairly in green. Nepse ended Sunday’s trading 11.3 points higher at 1,392.68 points.

Stocks seem to find some ground around the 1,160-1,165 points level as the index bounced back from the respective level in two consecutive sessions. Sellers refraining from going cheaper levels and entry of buyers in the current level have helped the market remain afloat in the current zone. Although the recent sentiment remains bearish with pandemic fear surrounding the market, market activity on Sunday reflected some optimism. The total turnover remained just shy of Rs 1 billion mark.

All sectors ended higher on Sunday, barring Hotels sub-group. The Mutual Fund sector rose the highest and added 2.02 percent. Next, Non-Life Insurance and Life Insurance segments saw strength and posted gains of 1.64 percent and 1.56 percent. Trading sub-index added 1.43 percent, while the ‘Others’ sub-group closed 1.2 percent higher. The heavyweight banking sector also closed the day with an advance of 0.67 percent.

Ajod Insurance Ltd was the most actively traded share of the day with a turnover of Rs 92 million. Nepal Reinsurance Company Ltd and Nepal Life Insurance Company Ltd’s shares, meanwhile, saw turnovers of Rs 89 million and Rs 72 million. Nepal Bank Ltd, NIC Laghubitta Bittiya Sanstha Ltd and NMB Bank Ltd’s shares also saw heavy transactions.

Recently listed scrips, Ajod Insurance Company Ltd and Sadhana Laghubitta Bittiya Sanstha Ltd remained locked in the upper circuit level of 10 percent. Nepal Bank Ltd’s shares also saw upbeat movement adding 6.48 percent on the unit price. The government owned bank published its unaudited earnings result for the fiscal year 2019/20. Its net profit stands at Rs 2.55 billion, which is a meager drop compared to Rs 2.59 billion in the year earlier. Unit prices of NMB 50 and NIBL Samriddhi Fund also shot up by almost 6 percent. Joshi Hydropower Development Company Ltd, Manjushree Finance Ltd and Everest Insurance Company Ltd were among other major gainers.

Conversely, Ganapati Microfinance Bittiya Sanstha Ltd and Arambha Chautari Laghubitta Bittiya Sanstha Ltd sank around 4 percent each. Union Hydropower Ltd, and Himalayan Power Partner Ltd followed suit with declines of 3.5 percent each. ICFC Finance Ltd, Soaltee Hotel Ltd and Reliance Finance Ltd were the other major laggards with losses of over 2 percent each.

In other major news, NLG Insurance Company Ltd announced a 7 percent stock dividend for the year 2018/19. The proposal is subject to approval from its Annual General Meeting (AGM).

On the technical front, the index formed a bullish hammer candlestick on the daily timeframe which reflects buyers driving the market higher towards the close. Hence, bulls are trying to regain control over the market after a steady downfall of the stock market. Meanwhile, no significant changes have been observed in the momentum indicators suggesting that investors should look for another higher close with volume before taking long positions in the 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)