Daily market commentary

Investors find some respite after two-day slump

Published On: July 30, 2019 04:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 30: The securities market opened trading on Monday on a positive note as the Nepal Stock Exchange (Nepse) index went up by more than 7 points in the initial trading hour. However, the benchmark index saw slight selling pressure after midday and gave up some of its gains in the remaining trading hours. Nepse index eventually closed the day 3.18 points higher at 1,255.98 points.

After losing more than 30 points in past two sessions, the index found some ground around 1,250-point level. Consequently, the secondary market took a breather from the two-day panic selling which came after the announcement of Monetary Policy for Fiscal Year 2019/20. Despite the weakness, listed companies have been publishing upbeat earnings which is likely to be a key catalyst in driving the market upward in the coming months.

Market activity remained subdued with a total turnover of only Rs 350 million. Microfinance sector outperformed the market substantially as the group's sub-index led its counterparts and rose 1.6%. Finance stocks also saw some strength and climbed up by 0.83%. 'Others', Development Bank, Banking, Hydropower and Non-Life Insurance sub-indices also eked out marginal gains. Meanwhile, modest losses came from Life Insurance, Manufacturing & Processing and Mutual Fund sub-indices.

Shares of United Insurance Co Ltd were traded the most ahead of the insurer's book closure for rights issue on Tuesday. The insurer saw a total turnover of over Rs 23 million. Prabhu Bank Ltd and Sana Kisan Bikas Bank Ltd also registered turnovers of over Rs 22 million and Rs 20 million, respectively. Shares of Shivam Cements Ltd, Agricultural Development Bank Ltd and Nepal Life Insurance Co Ltd's shares were also actively traded on the day.

Microfinance stock dominated the list of advances. Share price of Nepal Agro Laghubitta Bittiya Sanstha Ltd rallied to hit the upper circuit of 10%. Shrijana Finance Ltd closely followed with a 9.70% gain on its share price. Further, recently-listed Swabhimaan Laghubitta Bittiya Sanstha Ltd, Sparsha Laghubitta Bittiya Sanstha Ltd and Infinity Laghubitta Bittiya Sanstha Ltd posted saw their respective share prices go up by 9.34%, 8.73% and 7.06%.

Conversely, energy sector stocks were among the major losers of the day. Share prices of Joshi Hydropower Development Co Ltd, Universal Power Co Ltd and Synergy Power Development fell by of over 3 % each. Unit prices of United Insurance Co Ltd, NIBL Samriddhi Fund – 1 and Gurkhas Finance Ltd, meanwhile, fell by over 2% each.

On corporate front, Prudential Insurance Company Ltd is holding its Annual General Meeting (AGM) for Fiscal Year 2017/18 on August 18. The insurer has not announced any dividend for the year. In other news, Laxmi Laghubitta Bittiya Sanstha Ltd has published its earnings report for the fourth quarter of FY2018/19. The microfinance company's net profit has grown by over 26% year-on-year to Rs 111 million.

As per the ARKS technical analysis, the index has witnessed a small bounce back from 1,250-point mark with a green candle formation on the daily timeframe. However, sentiment remains neutral to slightly bearish as indicated by technical indicators. Hence, only if the rebound is validated by further green candles with decent volume, some upward movement can be expected. On the downside, immediate support lies at 1,240-point mark.

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