Daily market commentary

Market activity drops as selling pressure eases

Published On: August 3, 2020 10:20 PM NPT By: Republica  | @RepublicaNepal

Nepse  index goes up 8 points

KATHMANDU, Aug 3: After witnessing a notable drop on Sunday, the stock market opened Monday’s trading on a weak note. The Nepal Stock Exchange (Nepse) index fell more than 11 points in the morning. Nonetheless, stocks made a recovery in the latter trading hours to hover close to the opening level throughout the afternoon. Some buying pressure was visible in the final trading hour as Nepse closed the day at 1,403.86 points – up 7.59 points against the previous day’s close.

Even though the index clawed back some of its prior session’s losses, the stock market continues to see indecision. Buyers are still holding back from taking heavy buying positions as Sunday’s decline has triggered some fear among investors regarding the possible impact in the market if the COVID-19 cases continue to grow in and outside the valley. Meanwhile, turnover also dropped notably to Rs 1.29 billion.

Traded sectors maintained positive bias as 9 out of 12 segments eked out gains on the day. Only Hydropower, Finance and Mutual Fund sub-indices turned red. Hotels stocks witnessed decent recovery as reflected by a 2.22 percent advance in the group’s sub-index. Trading sector also saw strength and closed 1.13 percent higher. Life Insurance and Non-Life Insurance sub-indices rose around 0.7 percent each. Heavyweight banks also ended 0.59 percent higher.

Prabhu Bank Ltd Promoter Share registered the biggest turnover of Rs 343 million. Next, Nepal Reinsurance Company Ltd, Nepal Life insurance Company Ltd and NIC Asia Bank Ltd logged in transactions worth Rs 100 million, Rs 63 million and Rs 51 million. NMB Bank Ltd, Nabil Bank Ltd and Everest Bank Ltd were among other top turnover stocks.

Ajod Insurance Ltd, on its second day of trading, added another 10 percent. Similarly, Arambha Chautari Laghubitta Bittiya Sanstha Ltd and Nepal Finance Ltd rose over 9 percent apiece. Nepal Seva Laghubitta Bittiya Sanstha Ltd, Green Development Bank Ltd and Oriental Hotels Ltd also saw buying pressure with gains of 7.27 percent, 6.54 percent and 6.49 percent, respectively.

On the other hand, hydropower stocks pulled back sharply. Dibyashwori Hydropower Company Ltd, Union Hydropower Company Ltd and Joshi Hydropower Development Company Ltd suffered losses of around 6 percent each. Chhyangdi Hydropower Ltd and United Finance Ltd dropped around 5 percent each. Other major decliners of the day include Himal Power Partner Ltd, Mithila Laghubitta Bittiya Sanstha Ltd and Arun Valley Hydropower Company Ltd.

On the technical front, the equity index marked a small bullish candlestick on the daily timeframe. While the selling pressure has subsided notably, indecision still prevails as volume also experienced a notable drop. Moving Average Convergence Divergence (MACD) formed a dead cross suggesting more downward movement likely, while Relative Strength Index (RSI) has pulled back towards 50 lines suggesting neutral momentum. Hence, investors must gauge the price action on the next trading session. A rebound backed by volume from the current 1,400 level will indicate strength, while a dip toward negative territory can trigger more selling in the equity market.

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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