Daily Commentary: Nepse breaks post lockdown high as BFIs advance

Published On: September 18, 2020 09:35 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 18: Stocks witnessed one of the best trading days in the last couple of months on Thursday. Stocks maintained positive bias throughout the trading session with the Nepal Stock Exchange (Nepse) index trading around 10 points higher in the beginning hour. The index plateaued at mid-day but considerable strength in the latter hours pushed the index 30.78points higher to close at 1,572.18.

After witnessing range bound trading for the past couple of sessions, the index climbed well over 1,550 point’s mark to hit a fresh post lockdown high. The current level is also only 4% lower against February’s multi-year closing high of 1,632 points. Notable enthusiasm seen in the banking sector along with hotel and hydropower segments has continued to drive the Nepalese equity market higher. Total turnover also remained upbeat with more than Rs. 3.7 billion worth of shares being traded on the day.  

Hotels segment rallied over 9% for a second straight day. Hydropower stocks closely followed with a 7.36% gain. Finance and Development Bank sub-indices, meanwhile, shot up by 6.13% and 3.73%. Market bellwether banks also climbed 2.3%. All other sectors edged higher, while only Non-Life Insurance sub-index registered minor loss.

Shares of Nepal Reinsurance Company Ltd led the list of actives with Rs. 150 million worth of the scrip being traded. Nepal Bank Ltd and Chilime Hydropower Company Ltd followed suit with turnovers of Rs. 126 million and RS. 106 million. Upper Tamakoshi Hydropower Ltd, Nepal Life Insurance Company Ltd and NMB Bank Ltd registered turnovers of Rs. 86 million, Rs. 76 million and Rs. 75 million, respectively.

Soaltee Hotel Ltd, Taragaon Regency Hotel Ltd, Himal Dolakha Hydropower Company Ltd and Reliance Life Insurance Ltd closed exactly at the upper circuit limit of positive 10%. Kalika Power Company Ltd, Shree Investment Finance Co. Ltd, Arun Valley Hydropower Development Company Ltd and Guheshwori Merchant Bank & Finance Co. Ltd also saw major buying pressure as each scrip rallied more than 9%.

On the other hand, NRN Laghubitta Bittiya Sanstha Ltd snapped its 8-day rally with a decline of 6.73%. Himalayan General Insurance Co. Ltd and Unilever Nepal Ltd also suffered with declines of more than 2%. Other losing scrips include Everest Insurance Co. Ltd, Bottlers Nepal Terai Ltd and Asian Life Insurance Company Ltd which fell by over 1% each.

On the announcement front, two listed companies announced their dividends for the year 2019/20. Machhapuchhre Bank Ltd became the first commercial bank to propose a dividend for the year. Its dividend stands at 10.40% including 7.03% bonus shares and 3.37% cash payout. Similarly, Asha Laghubitta Bittiya Sanstha Ltd proposed a 15% stock dividend and 0.89% cash dividend for tax purposes.

As per ARKS technical analysis, the market opened higher and formed a bullish candlestick on the daily timeframe. Consequently, the index broke its immediate resistance at 1,550 points with notable volume which signals more upward movement on the cards. Subsequently, after minor pullbacks, technical indicators also reflect buying momentum prevailing in the current scenario. Given the index manages to maintain its ground above 1,550 points, the equity market is likely to test its February high at around 1,630 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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