Daily Commentary: Nepse ends 17 points lower as earnings take a hit

Published On: August 17, 2020 08:27 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Aug 16: A sharp fall in the morning saw the Nepal Stock Exchange (Nepse) index sink over 27 points in the first few minutes of Sunday’s trading session. Some volatility ensued thereafter as the benchmark partially recouped earlier losses within the first half an hour of trading. The Nepse index hovered in the red after mid-day finally settling below the 1,400-point mark at 1,391.46 points. The day’s loss tally was recorded as 17.33 points.

Losses accentuated as many listed companies published their unaudited earnings for the fiscal year 2019/20 on Friday. Majority saw their earnings drop year-on-year, while only a few managed to buck the trend and reported growth in earnings. Hence, on the murky prospect of future earnings as well as possible dividends for the previous fiscal year, investors took a major step back allowing sellers to dominate the day’s session. Market activity also increased substantially as buyers took significant buying positions at the day’s lower prices. Over Rs 1.25 billion worth of share traded hands.

Manufacturing & Processing stocks led the losses driven by lower than expected sales by some of the leading listed industries. The group’s sub-index fell 2.14 percent. Development Bank and Banking sectors also suffered and fell 1.83 percent and 1.61 percent, respectively. Microfinance sub-index, meanwhile, shed 1.23 percent. All other segments closed in the red, barring Trading sector, which managed to close 1.32 percent higher.

Nepal Bank Ltd led the day’s turnover with over Rs 81 million worth of the shares being traded on Sunday. Nepal Reinsurance Company Ltd and Nepal Life Insurance Company Ltd followed suit with turnovers of Rs 77 million and Rs 74 million. NMB Bank Ltd, Kumari Bank Ltd, Himalayan Distillery Ltd and NIC Asia Bank Ltd were the other active stocks of the day.

Sadhana Laghubitta Bittiya Sanstha Ltd stretched its rally further with a gain of 9.92 percent. Besides, few hydropower stocks outperformed the market notably. Chhyangdi Hydro Ltd, Synergy Power Development Ltd and Himal Dolakha Hydropower Company Ltd posted advances of 9.64 percent, 8.25 percent and 5.75 percent. Nepal Bank Ltd also shot up by 4.78 percent, followed by Karnali Development Bank Ltd and Api Power Company Ltd which rose over 3 percent each.

In contrast, shares of Ankhu Khola Jalavidhyut Company Ltd suffered the most and tumbled 7.41 percent. Both promoter shares and ordinary shares of Nepal Investment Bank Ltd took a major knock as the respective prices fell around 6 percent apiece. Union Hydropower Ltd, Ajod Insurance Ltd and National Microfinance Laghubitta Bittiya Sanstha Ltd were among other major decliners.

On the technical front, the formation of a bearish candlestick marks a second straight day of downward movement. As sellers remain in control, Nepse has ended slightly below the psychological 1,400 points’ mark. Momentum is currently favoring bears in the present context, making a test of crucial 1,350-1,360 points support zone likely. On the other hand, an immediate recovery and close above 1,400 points with volume can see the index maintain its overall bullish stance.

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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