Daily Commentary: Nepse triggers positive circuit breaker for a second straight day

Published On: July 1, 2020 10:00 PM NPT By: Republica  | @RepublicaNepal

KATMANDU, July 1: Strength carried over from previous session on Wednesday’s trading, as stocks shot up since the beginning of the trading session. With the Nepal Stock Exchange (Nepse) index surging to hit the first circuit limit of 4 percent in the first half an hour, trading was halted for 20 minutes. After resumption, Nepse hit another circuit limit of 5 percent at mid-day further forcing another trading break of 40 minutes. Nepse quickly shot up to 6 percent, finally triggering a trading end for the day. Eventually, Nepse ended the day at 1,336.52 points.

With two straight days of massive rally, Nepse recouped its losses of the previous eight sessions including a few sessions from the pre-lockdown period. Hence, sentiment has remained strongly bullish with buyers storming the market as almost all sectors saw high buying pressure. Investors attribute the current rally to excess liquidity, lower interest rates and new investors entering the market among others. On the other hand, supply side has remained subdued. In the truncated trading session, only Rs. 407 million worth of securities changed hands.

Banking and Life Insurance stocks led the day’s rally with both sub-indices shooting up by over 7 percent. Non-Life Insurance sector closely followed with a 6 percent gain. All other sectors closed the day higher barring Hotels segment.

Nepal Life Insurance Company Ltd witnessed the highest turnover in the day as over Rs. 67 million worth of its shares were exchanged. Kumari Bank Ltd Promoter Share and Himalayan Distillery Ltd saw turnovers of Rs 50 million and Rs 42 million, respectively. Shivam Cements Ltd, NIC Asia Bank Ltd, NMB Bank Ltd and Citizen Investment Trust were the other active stocks of the day.

A number of companies remained locked within the upper circuit limit of positive 10 percent. Citizens Bank International Ltd, Sana Kisan Laghubitta Bittiya Sanstha Ltd, Citizen Investment Trust and National Life Insurance Company Ltd added 10 percent apiece. RMDC Laghubitta Bittiya Sanstha Ltd, Butwal Power Company Ltd, Gurans Life Insurance Company Ltd and Shikhar Insurance Company Ltd also jumped over 9 percent each.

National Microfinance Bittiya Sanstha Ltd and Oriental Hotels Ltd, on the other hand, sank over 3 percent each. Nepal Telecom Ltd’s shares fell 2 percent, while Guheshwori Merchant Bank & Finance Co. Ltd, ICFC Finance Ltd and Barun Hydropower Co. Ltd shed 1 percent apiece.

On the technical front, the market formed a strong bullish candlestick on the daily timeframe suggesting strong momentum prevailing in the market. Technical indicators also suggest selling pressure easing off after sustained downfall ahead of the lockdown. An immediate resistance of the market lies at around 1,350 points. Hence, its breach might see the market make further upward move, else some retracement can be seen from the aforementioned zone.

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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