Daily Market Commentary

Daily turnover makes another record, but profit-taking weighs on stocks

Published On: May 19, 2021 07:45 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 19: The equity market opened Wednesday’s session firmly in green with the Nepalese stocks’ benchmark index trading over 2,800 mark for the first half of the session. However, aggressive profit booking in most of the sectors led by energy sub-group pulled the index in negative territory in late afternoon. At the close, Nepse saw a modest retracement of 13.09 points to finish session at 2,780.81.

After a historic trading day on Tuesday, where both the index and daily turnover made a record, some profit booking was evident on Wednesday’s session. With back-to-back gains coming from seven straight sessions, the bourse saw notable profit booking on the day. Nonetheless, active market participation was seen on the day reflecting buying enthusiasm yet to wither off. The stock exchange saw a turnover of almost Rs. 12 billion on the day. 

Most of the sectors mirrored the broader market with Hydropower segment correcting the most. The sub-index slumped 2.16%. Investment and Development Bank sectors, subsequently, corrected 1.76% and 1.67%. Manufacturing & Processing, Non-Life Insurance and ‘Others’ sub-indices also suffered losses of over 1%. Microfinance and Life Insurance segments inched lower. On the other hand, Trading sub-index rose 0.86%. Mutual Fund, Hotels & Tourism, Banking and Finance indices eked out moderate gains. 

Among actives, shares of Nepal Reinsurance Company Ltd were traded the most. Over Rs. 556 million worth of the equity changed hands. National Life Insurance Company Ltd and National Hydropower Company Ltd’s share were also heavily traded with transactions of more than Rs. 453 million and Rs. 306 million. Radhi Bidyut Company Ltd, Sagarmatha Insurance Company Ltd, Century Commercial Bank Ltd and Hydroelectricity Investment and Development Company Ltd were the other top turnover stocks on Wednesday.

Samata Gharelu Laghubitta Bittiya Sanstha Ltd, Ruru Jalbidhyut Pariyojana Ltd, Gurkhas Finance Ltd, Nepal Finance Ltd and Karnali Development Bank Ltd led the list of major advances. All scrips rallied 10%. Radhi Bidyut Company Ltd and United Idi Mardi RB Hydropower Ltd closed around 8% higher. Bishal Bazar Company Ltd, Best Finance Company Ltd and Arun Valley Hydropower Development Company Ltd followed suit with gains of around 5% apiece.

On the other hand, Ngadi Group Power Ltd came under significant pressure. The scrip tanked 6.88%. Hydropower stocks followed as United Modi Hydropower Ltd, Nepal Hydro Developers Ltd, Universal Power Company Ltd and Rairang Hydropower Development Company Ltd’s shares also struggled with pullbacks of over 5% each. Besides, mainly hydropower and finance stocks dominated the list of major losers.

As per the ARKS technical analysis, the market formed a bearish candlestick suggesting heavy profit booking on the day. Besides, the index’s reaction at 2,800 mark and pullback below the respective level suggests possibility of some corrective action in the equity market. However, with many sectors yet to witness a decent advance, a deep correction is highly unlikely. A consolidation or a retracement above 2,700 mark can provide opportunities to go long. 

This column is produced by ARKS Capital Advisors Ltd.

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