Weekly Market Commentary

Index tumbles 150 points as stocks give up prior-week gains

Published On: November 12, 2021 07:00 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Nov 12: The Nepalese equity market opened for 3 days in the week on review amidst festive holidays. On Monday, Nepse fell 19.20 points followed by a massive 79.79-points’ slump on Tuesday as losses accelerated. Further, with aggressive selling seen on Thursday, the benchmark gave up another 59.56 points. Consequently, Nepse finished week with a decline of 158.55 points or 5.57% at 2,848.84.

After two straight weeks of gains, the index saw a firm correction giving up most of the earlier advance. In the meantime, Nepse fell below psychological 2,700 mark. The upcoming review of monetary policy by NRB will likely play a crucial role in determining the overall sentiment of investors which will eventually be key for the local equity market.

Development, Finance and ‘Others’ sub-indices suffered the most with each losing more than 8% in the week. Hotels & Tourism and Non-Life Insurance sector also tanked notably and closed more than 6% lower. All other segments came under pressure and ended with notable dips.

This week few commercial banks announced dividends including Mega Bank Ltd, Laxmi Bank Ltd and Prabhu Bank Ltd. The dividend capacity of the commercial banks in this year were mainly impaired by increment of loan loss provision from 1% to 1.3% that came in effect from fiscal year 20/21. However, quarterly reports of BFIs have remained upbeat counteracting the dips in dividends.

On the weekly technical front, the index formed a strong bearish engulfing candlestick reflecting sellers control in the week on review. Consequently, all momentum indicators reflect probability of further bearish move. An immediate support lies at 2,600 mark which can help the index stage a rebound given buyers enter the psychological level with notable momentum. On the other hand, its breach can see the index test another support at 2,500.

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 thispublication)

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