Daily Commentary: Nepse sheds 6.2 points

Daily turnover also falls to Rs 5.14 billion

KATHMANDU, Dec 16: Despite opening Wednesday’s session firmly higher, a notable correction in the morning dragged the Nepal Stock Exchange (Nepse) index in red briefly in the morning. The benchmark index recouped most of its earlier losses in the afternoon and traded flat for the remaining trading hours. Consequently, Nepse ended session with a 6.20-point dip at 2,055.22 points.

Following early week strength, the local equity market’s momentum eased in the previous couple of sessions amidst profit booking on majority of the sectors. With index trading close to its all-time high, investors are approaching the market with caution of late. Hence, turnover fell for a second consecutive day. Rs 5.14 billion worth of securities were traded on Wednesday.

Sectors ended mixed, with major gains coming from Microfinance sub-group. The sub-index rallied 2.34%. Trading Index also saw strength and rose 1.18%. Manufacturing & Processing, Development Bank, Hotels, Banking and Mutual Fund sectors closed in positive territory. Meanwhile, ‘Others’ Hydropower, Non-Life Insurance and Life Insurance stocks fell over 1% on average. Finance sub-group inched marginally lower.

Nepal Credit & Commerce Bank Ltd posted the highest turnover of Rs 394 million. Nepal Life Insurance Company Ltd also saw heavy transactions as over Rs 319 million worth of its shares changed hands. Nepal Reinsurance Company Ltd, Nabil Bank Ltd and Shikhar Insurance Company Ltd registered turnovers of Rs 243 million, Rs 184 million and Rs 147 million. Himalayan Distillery Ltd, Nepal Investment Bank Ltd and RMDC Laghubitta Bittiya Sanstha Ltd were among other active stocks.

Among advances, Chhyangdi Hydropower Ltd and Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd shot up by exactly 10% hitting the upper circuit limit. Summit Laghubitta Bittiya Sanstha Ltd, Narayani Development Bank Ltd, RMDC Laghubitta Bittiya Sanstha Ltd, Mountain Energy Nepal Ltd and Suryodaya Laghubitta Bittiya Sanstha followed suit with gains of over 9% each.

In contrast, NMB50 mutual fund units suffered the most and closed 4.48% lower. Shikhar Insurance Company Ltd, Goodwill Finance Co. Ltd and Ridi Hydropower Development Company Ltd’s shares also struggled giving up more than 3% each. Chilime Hydropower Company Ltd, Taragaon Regency Hotels Ltd and Sanima Mai Hydropower Ltd were the other major decliners.

As per the ARKS technical analysis, the market formed a small bearish candlestick as the index could not breakthrough its previous high of 2,071 for a second consecutive day. However, losses have remained modest indicating no real momentum behind the recent selling pressure. Further, the index has also held ground above 2,050-point mark, suggesting a low probability of further slump towards recent low of 1,925-point level. Meanwhile, investors should wait for a breakout above 2,070-2,100-point zone to take further buy positions. Else, in case of retracement, a rebound from 2,000’s level with volume would also signal possibility of another move upward.

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)

www.arkscapitaladvisors.com