Daily Commentary: Stocks inch lower on Monday’s subdued trading

Published On: September 28, 2020 08:00 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 28: Stocks opened in green on Monday and saw lackluster trading for most of the beginning hour of the session. The Nepal Stock Exchange (Nepse) saw some weakness after mid-day with the benchmark trading in red throughout the latter trading hours.

The benchmark index closed 4.73 points lower at 1,560.83 points.

Following a decent bullish move since mid-August, the index has finally lost some steam and is consolidating around 1,550 points’ level. Loss of momentum in hydro sector with correction seen in most of the composite stocks has resulted in cooling off of the recent rally. Hence, the index is trending in a confined range of late. Turnover remained under Rs 2 billion mark with only Rs 1.69 billion worth of securities being traded in the session.

All sectors witnessed modest dips, while only Finance and Development Bank sectors managed to finish higher. Sub-index of the former rose 1.49% and that of the latter inched 0.12% higher. On the other hand, Trading and Hotels segments led the losses dropping by over 1% each. Manufacturing & Processing and Non-Life Insurance stocks also struggled and closed around 0.6% lower.

Among actives, shares of Himal Dolakha Hydropower Development Company Ltd were traded the most with turnover of over Rs 93 million. Nepal Reinsurance Company Ltd, Arun Valley Hydropower Development Company Ltd and Prabhu Bank Ltd followed suit with turnovers of Rs 64 million, Rs 59 million and Rs 53 million. Nepal Life Insurance Company Ltd, Kumari Bank Ltd and Civil Bank Ltd were among other active stocks.

Mainly, Finance stocks saw strength. Nepal Finance Ltd shot up by 9.63% followed by Central Finance Company Ltd and Reliance Finance Ltd, which rose 8.11% and 7.64%, respectively. Support Microfinance Bittiya Sanstha Ltd, Progressive Finance Ltd and Kamana Sewa Bikas Bank Ltd also saw strength and posted gains of 5.11%, 4.31% and 3.85%, respectively.

Conversely, Panchthar Power Company Ltd witnessed the biggest loss of the day tumbling 5.17%. Gurkhas Finance Ltd and Dibyashwori Hydropower Ltd also came under pressure and shed over 4% each. Ankhu Khola Jalvidhyut Company Ltd, Sanima Equity Fund and Ngadi Group Power Ltd were the other major losing scrips with declines of around 3% each.

On the technical front, the equity market formed a small bearish candlestick on the daily timeframe reflecting slight weakness. However, the selling pressure has remained subdued with less supply seen on lower rates. Hence, the market has held ground above the crucial 1,550-point mark. Besides, technical indicators also reflect loss of momentum suggesting further correction likely. A dip below 1,550 points mark can trigger more downward movement. In contrast, a rebound from that level can see extension of the uptrend.

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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