Daily Commentary: Nepse ends in red as profit booking extends

Benchmark index falls 12 points

KATHMANDU, Sept 8: After trading flat in the first few minutes of Monday’s trading, the benchmark Nepal Stock Exchange (Nepse) index fell over 15 points in the morning. Stocks staged a rebound a couple of times in the afternoon but could not trade above the opening level. After struggling in the final hour, stocks finally ended firmly lower. Consequently, Nepse finished Monday’ session 12.17 points lower at 1,487.81.

With Monday’s loss, Nepse stretched its losses for a third consecutive session. While recent daily losses are modest compared to August end’s upward rally, some selling pressure is evident in the sessions of late on the back of active profit booking. In the meantime, activity remains relatively subdued but turnover still stands firmly above par. Over Rs. 2.16 billion worth of shares were traded on the day.

Heavyweight banking sector led the day’s decline as the banking sub-index fell 1.42%. Life Insurance and Development Bank sectors closely followed with losses of 1% and 0.9%, respectively. Non-Life Insurance, Manufacturing & Processing, Mutual Fund, Hydropower and Hotels sectors also suffered and ended the day in negative territory. On the other hand, the Trading segment outperformed and jumped 2.48%. ‘Others’, Finance and Microfinance sub-indices eked out modest gains.

Shares of Nepal Reinsurance Company Ltd was the most actively traded share on the day with a turnover of Rs. 284 million. Citizen Investment Trust’s shares were also heavily traded with turnover of Rs. 156 million. Neco Insurance Company Ltd, NMB Bank Ltd Promoter Share and Nepal Life Insurance Company Ltd followed suit with turnovers of Rs. 90 million, Rs. 88 million and Rs. 82 million.

Unnati Sahakarya Laghubitta Bittiya Sanstha Ltd continued its upward rally for a fifth consecutive session. The micro sector lender’s shares ended 10% higher. Universal Power Company Ltd and Joshi Hydropower Development Company Ltd were the leading energy shares with advances of 9.78% and 8.86%. Citizen Investment Trust and Asha Laghubitta Bittiya Sanstha Ltd also saw considerable strength and jumped over 7% each. Besides, mainly other energy stocks ended the day in green.

NRN Infrastructure and Development Ltd shed another 10% after swinging between upper and lower extremes in the previous session. Besides, few energy stocks corrected sharply after massive rallies in the past trading days. Ghalemdi Hydro Ltd, Himal Power Partner Ltd and Arun Kabeli Power Ltd suffered losses of 6.85%, 5.88% and 5.08% respectively. Further, NIBL Pragati Fund units, Nepal Finance Ltd and Mountain Hydro Ltd struggled with losses of over 3% each.

The index, as per ARKS technical analysis, continued its downward movement with another small bearish candlestick formation. Despite turning red, losses remain restrained on the back of profit booking as opposed to heavy panic selling. Hence, corrective action has prevailed in the bourse with the overall trend remaining upwards. Support at 1,470 and 1,450 points are crucial in maintaining the current uptrend. The breach of these crucial levels might see the index revert towards negative territory firmly. Hence, investors must keep an eye for rebounds from the given levels for long entry 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)