Daily Commentary: Nepse slides sharply amid extreme volatility

Published On: July 3, 2020 07:15 AM NPT By: Republica  | @RepublicaNepal

Stock market in the red after two days of gain

KATHMANDU, July 3: Despite opening the day in the green, the Nepal Stock Exchange (Nepse) benchmark index succumbed to a massive selling pressure within the first 10 minutes of trading to trend in negative territory.

A steady slump dragged the index 4 percent lower, triggering its first circuit breaker on the downside. Trading halted for 20 minutes thereafter. Nepse further hit circuit breaker limits of 5 percent and 6 percent after the resumption of the trading.  The trading was suspended for the whole day after the third circuit breaker. 

The 80 points decline saw the benchmark end at 1,256.11.

After two days of massive gains seen in the bourse, sellers dominated Thursday’s trading as most stocks had added 20 percent to 30 percent since the start of trading post-lock down relaxation.  The sustainable advance of the securities still holds grip among investors. Besides, further volatility can be expected in the upcoming sessions which was also visible in the international markets after the pandemic-fueled crash. The turnover also remained moderate with over Rs 476 million worth of shares traded in the session.

All sectors ended the day lower, barring Mutual Segment which closed flat. 

Hotels sector’s free fall persisted as the group’s sub-index axed another 8.69 percent. 

Life Insurance and Banking sub-indices also shed over 7 percent each. All other sectors ended the day notably lower.

Among actives, Nepal Reinsurance Company Ltd and Nepal Life Insurance Company Ltd were the most heavily traded shares. Both scrips saw a turnover of over Rs 60 million each. Himalayan Distillery Ltd followed with a turnover of Rs. 38 million. NIC Asia Bank Ltd, Citizen Investment Trust and NMB Bank Ltd were among other top turnover stocks.

Few financial stocks bucked the trend. Swabhimaan Laghubitta Bittiya Sanstha Ltd was the biggest gainer of the day as its share price jumped 8 percent. Gurkhas Finance Ltd and Goodwill Finance Co Ltd saw advances of over 3 percent each. Nepal Reinsurance Company Ltd and Miteri Development Bank Ltd also ended up 3 percent apiece.

On the other hand, shares of Soaltee Hotel Ltd fell to hit the lower circuit of 10 percent. Prabhu Bank Ltd also tumbled almost 10 percent. Similarly, shares of Himalayan Distillery Ltd, Life Insurance Co Nepal and Global IME Bank Ltd witnessed drops of at least 9 percent each. Asian Life Insurance Company Ltd, Nepal Bank Ltd and Nepal Life Insurance Company Ltd gave up around 8 percent each.

On the technical front, the market tested its resistance at around 1,250 point’s level in the day. The failure to breakout above the mark thereof saw the index tumble to form a strong bearish candlestick. The fall has also dented the markets momentum making a test of support at 1,200 points very likely given the loss extends on Sunday’s session. Overall technical indicators suggest that the market still lacks a clear direction making heavy trading highly risky in the current pandemic driven volatility.

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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