Daily Commentary: Stock market consolidates after politically fueled volatility

Published On: December 23, 2020 07:30 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Dec 23: The local share market opened Wednesday’s trading in an upbeat note climbing over 2,100’s level in the morning. The index retraced sharply within the beginning trading hour and hovered around 2,100 mark at mid-day. Stocks saw further decline in the latter trading hours pushing the benchmark towards the opening level. At the close, Nepse stood at 2,068.46 – up a modest 7.04 points against the session earlier.

The dust has finally seemed to settle in the equity market after massive fluctuations seen in the beginning of the week where the index gyrated more than 240 points. Despite marking a fresh all-time intraday high, the index is still 3 points shy of its all-time closing high. Hence, some indecision was also witnessed in the day as investors mulled over possible directions of the equity market in the coming sessions. Turnover remained above par with over Rs. 6.86 billion worth of shares being traded in the session.

Most of the segments saw losses in the day, while Life Insurance, Banking, and Mutual Fund sectors bucked the trend. The respective sub-indices rose 2.87%, 1.58% and 0.62%. The ‘Others’ sector suffered the most as the group’s average fell 2.21%. The hydropower segment also suffered a loss of 1.34%. Hotels and Microfinance sub-indices lost almost 1% each. All other sectors ended marginally in red.

Shares of Nepal Life Insurance Company Ltd saw massive transactions with a record individual scrip turnover of Rs. 1.43 billion. The life insurer heavyweight announced its dividend for the year 18/19 in the evening earlier. The dividend includes 31% stock dividend and 20% cash payout. National Life Insurance Company Ltd followed suit with a turnover of Rs. 455 million. NIC Asia Bank Ltd, Nabil Bank Ltd and Nepal Reinsurance Company Ltd posted turnovers of Rs. 330 million, 279 million and Rs. 233 million. Other commercial bank stocks were also heavily traded.

Nabil Bank Ltd and Samriddhi Finance Company Ltd led the list of gaining scrips and closed almost 10% higher. National Life Insurance Company Ltd, Forward Microfinance Laghubitta Bittiya Sanstha Ltd and Mega Bank Ltd also saw strength with gains of 7.2%, 5.42% and 4.33%. Panchakanya Mai Hydropower Ltd, Nepal Credit and Commerce Bank Ltd and Nepal Life Insurance Company Ltd jumped around 4% each.

As per the ARKS technical analysis, the index formed a small bearish candlestick after testing 2,100 psychological level. Nonetheless, the index still trades near its all time closing high of 2,071 mark where a reversal will suggest possibility of further correction towards 2,000 level. Else, the index consolidating in the current zone or a breach of the all-time high towards the upside will suggest extension of the uptrend further. Momentum indicators, meanwhile, suggest that sellers will likely dominate the market for the short run.

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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