Daily Commentary: Nepse snaps losing streak as stocks erase morning losses

Published On: September 9, 2020 08:04 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 8: The local bourse started Tuesday’s trading on a weak note with the Nepal Stock Exchange (Nepse) Nepse index shedding as much as 10 points in the beginning hour. Nonetheless, the equity market staged a recovery after mid-day climbing as high as 1,500’s level in the morning. The benchmark witnessed slight pullback towards the closing hour but managed to close the day in green with a 7.35 points’ gain at 1,495.16.

Following three consecutive sessions of decline, the selling pressure eased off with bulls trying to gain control on the day. However, some uncertainty prevails on the back of dropping volumes. While sellers are taking a more cautious approach to offload shares, buyers have also refrained from taking heavy buying positions. Hence, lack of clarity might see the index experience subdued trading activity in the forthcoming sessions as well. Total turnover on the day was recorded as Rs. 1.80 billion – a modest dip compared to Monday’s trading session.

Trading sub-index led the day’s rally with a gain of over 8%. Manufacturing & Processing segment also saw strength and jumped 2.74%. Hydropower and ‘Others’ sectors also closed over 1 % higher. Non-Life Insurance sub-index rose 0.99%, while Finance index added 0.67%. All other sectors ended in positive territory, except Banking and Hotels sectors, which ended marginally lower.

Shares of Nepal Reinsurance Company Ltd continued to lead the top turnover stocks’ chart. Over Rs. 275 million worth of the reinsurer’s shares changed hands. Citizen Investment Trust Ltd and Neco Insurance Co. Ltd, subsequently, registered turnovers of RS. 122 million and Rs. 99 million. Shivam Cements Ltd, Chilime Hydropower Company Ltd and Nepal Life Insurance Company Ltd were among other actively traded scrips.

Four companies remained locked in the upper circuit level of positive 10%. Salt Trading Corporation, Unnati Sahakarya Laghubitta Bittiya Sanstha Ltd, NRN Laghubitta Bittiya Sanstha Ltd and Joshi Hydropower Development Company Ltd were the top advances. Chilime Hydropower Company Ltd, Manjushree Finance Ltd and Citizen Investment Trust were the other major advances with gains of over 6% each. Reliance Life Insurance Ltd marked its first day of trading in the exchange on Tuesday. After recording its first transaction at Rs. 322 per share, the life insurer’s stock saw significant buying pressure pushing the price over 5% higher to close at Rs. 340 per share.

On the other hand, NRN Laghubitta Bittiya Sanstha Ltd tanked 10% for a third straight day. Energy stocks witnessed substantial correction with Panchakanya Mai Hydropower Ltd, Ankhu Khola Jalavidhyut Company Ltd and Ghalemdi Hydro Ltd retracing 6.32%, 5.97% and 4.41%, respectively.  Universal Power Company Ltd, Rairang Hydropower Development Company Ltd and Dibyashwori Hydropower Ltd fell by over 3 % each.

Technically, the market saw selling pressure ease off with the formation of a small bullish spinning top candlestick. While indecision persists and a rebound is yet to be confirmed, the green candle signals sellers losing momentum. In the day a recovery occurred from around 1,477 points’ mark which will be the key level to watch in the coming session to gauge the short term direction. Meanwhile, the chart still indicates a market moving in an upward trend with formation of higher tops and higher bottoms. Hence, a rebound from the 1,470 level with increase in volumes can give opportunities for investment.  

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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