Daily Commentary

Losses ease as investors look past lockdown fear

Published On: August 7, 2020 08:02 AM NPT By: Republica  | @RepublicaNepal

Nepse benchmark index drops 1 point

KATHMANDU, Aug 7: Despite some selling pressure seen early in the morning, buyers negated the sellers as the Nepal Stock Exchange (Nepse) index closed almost unchanged at 1,381.38 points on Thursday. The benchmark index suffered a modest loss of 1.29 points.

As investors shrug off lockdown fears, they remained relatively enthused in taking buying positions at lower prices. Hence, the stock market found some footing after quite a few sessions of downward movement.

The stock market observed a modest decline as the government on Wednesday cleared air on rumors about another lockdown and imposed an odd and even vehicle system for reduced traffic and people’s movement. Further, it has also restricted any movement from 9 at night to 5 in the morning in the valley. However, these will only be applicable in districts with more than 200 COVID-19 cases. Nonetheless, a notable recovery is yet to be observed. Traded volumes fell slightly as Nepse witnessed a turnover of Rs 921 million.

Sectors ended mixed contributing to Thursday’s flat close. Hotels index led the advances with a gain of 2.27 percent. Life Insurance, Finance and Development Bank sub-indices also saw some strength and closed around 0.6 percent higher. Non-Life Insurance and Manufacturing & Processing segments also ended the day in green. On the other hand, Trading stocks suffered the most and shed 1.1 percent.  The Mutual Fund sector tumbled 0.84 percent followed by the Hydropower sub-group which fell 0.44 percent. ‘Others’, Banking and Microfinance sub-groups suffered minor losses.

Shares of Nepal Reinsurance Company Ltd continued to witness massive transactions. Over Rs 118 million worth of the reinsurer’s shares were traded on Thursday. Nepal Life Insurance Company Ltd, correspondingly, witnessed a turnover of Rs 85 million. NIC Asia Bank Ltd, NMB Bank Ltd and Arambha Chautari Laghubitta Bittiya Sanstha Ltd were the other active stocks with turnovers of Rs 40 million, Rs 36 million and Rs 24 million, respectively.

On the gainer’s front, three companies remained locked in the upper circuit limit of 10 percent. Gurans Laghubitta Bittiya Sanstha Ltd, Ajod Insurance Ltd and Nepal Finance Ltd shot up by over 9 percent each. Green Development Bank Ltd shot up by 7.41 percent, while Dibyashwori Hydropower Ltd and Sparsha Laghubitta Bittiya Sanstha Ltd posted gains of around 6 percent each. Sparsha Laghubitta Bittiya Sanstha Ltd published its earnings report for the fiscal year 2021/22. As per the unaudited financials, the microfinance saw its net profit grow by over 84 percent to Rs 28.82 million. Consequently, it’s per share earning stands at Rs 30.74.

Conversely, Mahila Sahayatra Laghubitta Bittiya Sanstha Ltd and Swabhimaan Laghubitta Bittiya Sanstha Ltd shares came under considerable pressure and dropped around 6 percent apiece. Energy stocks followed suit as Kalika Power Company Ltd, Api Power Company Ltd and Himal Dolakha Hydropower Company Ltd closed over 5 percent lower each.

On the technical front, with support visible at around 1,350-1,360 points mark, the equity index found some footing on Thursday’s trading rebounding from an intraday low of 1,365 points. However, the index did not manage to close above the previous day’s level. Hence, some uncertainty still looms in the secondary market which is also reflected by a doji candlestick formation. A rebound on Sunday with volume can suggest buildup of confidence in the equity market which will be validated by a breach of 1,400 points psychological level. On the other hand, a dip can see the index test 1,350-60 point’s level again.

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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