Daily Commentary: Nepse dips 17 points as heavyweight banking group suffers selling pressure

Published On: July 23, 2020 08:05 AM NPT By: Republica  | @RepublicaNepal

Hotels shares rally on optimism as govt announces an end of lockdown

KATHMANDU, July 23: After trading slightly higher in the morning, the Nepal Stock Exchange (Nepse) index erased earlier gains to trade in the red by mid-day. After plateauing slightly below the opening level, the index witnessed further decline finally closing the day firmly in red. At Wednesday’s close, Nepse stood at 1,432.44 points – down 17.5 points against the prior day.

Stocks continued to correct firmly as banking stocks saw persistent selling pressure. The heavyweight, which rose on monetary policy announcement, saw the gains quickly evaporate as profit booking prevailed in the recent sessions. However, the index is yet to close below Sunday’s opening level with the index still trending higher for the week. Wednesday’s trading saw active market participation. Total turnover recorded was Rs 1.5 billion.

Barring Hotels segment, all sectors suffered losses. Hotels rallied on business optimism as the government announced an end of the lockdown period from Wednesday. The sub-index shot up by 9 percent. The Mutual uind sector eked out marginal gain. On the other hand, Banking and ‘Others’ segment suffered the biggest correction as both fell by over 1.7 percent. Hydropower and Finance stocks also struggled with both shedding over 1 percent each.

On the turnover front, shares of NIC Asia Laghubitta Bittiya Sanstha Ltd were heavily traded after a relentless rally since listing on Nepse. Over Rs 181 million worth of the micro-sector lender’s shares changed hands. Similarly, Nepal Reinsurance Company Ltd posted a turnover of Rs 162 million. Nepal Life Insurance Company Ltd and NMB Bank Ltd witnessed transactions of Rs 99 million and Rs 81 million. Himalayan Distillery Ltd, NIC Asia Bank Ltd and Shikhar Insurance Ltd were the other actively traded shares of the day.

All three listed Hotel stocks remained locked in the upper circuit of 10 percent. Oriental Hotels Ltd, Taragaon Regency Hotel Ltd and Soaltee Hotel Ltd rose 10 percent, 9.95 percent and 9.49 percent, respectively. Subsequently, NIC Asia Laghubitta Bittiya Sanstha Ltd and Shree Ram Sugar Mills Ltd closed over 6 percent higher. Himal Dolakha Hydropower Company Ltd, Excel Development Bank Ltd and Global IME Sammunat Scheme 1 were among other major gainers of the day. 

Shares of Nepal Seva Laghubitta Bittiya Sanstha Ltd, on the other hand, tumbled 8.61 percent. Energy stocks also saw a notable decline. Ghalemdi Hydro Ltd and Synergy Power Development Ltd fell over 6 percent, while Joshi Hydropower Development Company Ltd and Ridi Hydropower Development Company Ltd logged a loss of over 5 percent each. Other major losing securities include Mithila Laghubitta Bittiya Sanstha Ltd, Green Development Bank Ltd and NMB 50 Mutual Fund.

As per ARKS technical analysis, with three consecutive bearish candlesticks formation bears remain in control in the present context. Further correction can see the index test 1,400 points mark where a rebound is likely. On the other hand, a slump might see the index test the crucial 1,350 points mark. Technical indicators show mixed signals. While, Relative Strength Index (RSI) has pulled back towards the neutral zone, Moving Average Convergence Divergence (MACD) still points upward. A bounce from 1,400 points can provide opportunities to go long.

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)


Leave A Comment