KATHMANDU, July 30: Stock market came under considerable pressure on Wednesday’s trading. After a fall of nearly 14 points within an half hour of trading in the morning, the Nepal Stock Exchange (Nepse) benchmark index tried to hold ground at mid-session. However, pulled by a constant bearish pressure, the market witnessed a steady decline till the final trading hours. At the close, the index stood at 1,431.52 points – down by 23.36 points against Tuesday’s close.
With the prominent slide, the index has stretched its losing streak for three consecutive sessions. On Tuesday, Nepal Rastra Bank (NRB) issued directives for microfinance institutions which emphasized on merger and acquisitions to raise the capital to meet up paid up capital requirements instead of issuing right shares. Besides, there are some constraints on cash dividend distribution for banking and financial institutions imposed by monetary policy for FY 2020/21. This also triggered some selling in BFIs shares. Nonetheless, the bourse continued to record active market participation as Rs 1.68 billion worth of shares were traded on the day.
All sectors closed the day on a negative territory. Hotels group suffered the most with the sub-index diving 3.64 percent. Non-life Insurance, Microfinance and Life Insurance stocks also struggled and shed by 2.39 percent, 2.34 percent and 2.18 percent, respectively. Similarly, Banking, Trading, Development Bank, Manufacturing & Processing and Mutual Fund sub-indices ended over 1 percent lower on the day. Hydropower, Finance and Others sub-indices finished the day in red.
On the active turnover list, shares of Nepal Reinsurance Company Ltd and Nepal Life Insurance Company Ltd were heavily traded and recorded a turnover of Rs 157 million and 108 million correspondingly. Likewise, NIC Asia Bank Ltd and Nepal Doorsanchar Company Ltd saw transactions of over Rs 88 million each. NMB Bank Ltd, Himalayan Distillery Ltd, NIC Asia Laghubitta Bittiya Sanstha Ltd and Nabil Bank Ltd were other actively traded shares of the day.
Hydropower stocks, Union Hydropower Ltd and Joshi Hydropower Development Company Ltd hit the upper circuit limit of 10 percent. It was closely followed by shares of Mirmire Microfinance Development Bank Ltd, Aarambha Chautari Laghubitta Bittiya Sanstha Ltd, and Ghalemdi Hydro Ltd which rose 9.95 percent, 9.8 percent and 9.43 percent, respectively. Dibyashwori Hydropower Ltd, Ankhu Khola Jalvidhyut Company Ltd and Khanikhola Hydropower Co. Ltd. were among other major gainers of the day.
On the other hand, Microfinances stocks saw a notable decline on the day. Shares of Janautthan Samudayic Laghubitta Bikas Bank Ltd dropped 9.45 percent. Likewise, Global IME Laghubitta Bittiya Sanstha Ltd and Mithila Laghubitta Bittiya Sanstha Ltd fell over 7 percent each while Sparsha Laghubitta Bittiya Sanstha Ltd, Nepal Seva Laghubitta Bittiya Sanstha Ltd, Swarojgar Laghu Bitta Bikas Bank Ltd, Sabaiko Laghubitta Bittiya Sanstha Ltd and Swabhimaan Laghubitta Bittiya Sanstha Ltd logged in losses of over 6 percent each.
As per ARKS technical analysis, the market formed three consecutive bearish candlesticks which reflects bears remaining in control in the present context. Further correction can see the index test 1,417-point mark where a rebound is likely. On the other hand, a decline might see the index test the key 1,350-point level. Meanwhile, buying positions can be taken on a volume backed rebound from the respective level.
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)