Daily market commentary

Market extends gains with heavy trading volume

Published On: August 10, 2020 10:30 PM NPT By: Republica  | @RepublicaNepal

Nepse benchmark index jumps 38 points 

KATHMANDU, Aug 10: After closing 11 points higher on Sunday, the Nepal Stock Exchange (Nepse) index began Monday’s trading in green adding more than 15 points in the morning. Following a pullback towards opening level at mid-day, stocks witnessed a steady advance with minor intermittent pullbacks. At the close, Nepse registered a gain of 37.74 points, or 2.71 percent, to close firmly above the 1400-point level at 1,430.41 points. 

Following a week of decline, the index began this week on a firmly bullish note. The gains on Monday were substantiated by heavy market activity as turnover stood at over Rs 1.5 billion. Investors seem confident on the prospect of the equity market while looking past the pandemic fear, which resulted in some correction in the previous week. Besides, heavyweight banks have begun publishing their fourth quarter reports. Investors also found respite as the impact of the lockdown on the banks’ profitability until the fourth quarter has remained modest so far.

The broad rally saw all sectors close firmly in green. Mutual Fund sub-group were the only exception posting a loss of 0.29 percent. The Non-Life Insurance sub-index led the advances closing over 4 percent higher. Hotels, Development Bank and Microfinance sectors also saw notable charm as each sector’s sub index jumped by over 3 percent. Sub-index of bellwether commercial banks also acted as a major catalyst in pushing the market higher. It climbed 2.77 percent. All other sectors closed the day with notable gains. 

Shares of Nepal Reinsurance Company Ltd and Nepal Life Insurance Company Ltd were traded the most in terms of monetary value. The respective scrips saw turnovers of Rs 123 million and Rs 120 million. Commercial banks followed suit with NMB Bank Ltd, NIC Asia Bank Ltd and Nepal Bank Ltd posting transactions of Rs 78 million, Rs 73 million and Rs 59 million. Ajod Insurance Ltd, Everest Insurance Company Ltd and Himalayan Distillery Ltd shares were also actively traded in the session.

Sadhana Laghubitta Bittiya Sanstha Ltd and Ajod Insurance Ltd continued to take the lead on the gainers front. Both remained locked in the upper limit of positive 10 percent. Ghodighoda Laghubitta Bittiya Sanstha Ltd, Everest Insurance Company Ltd and Shangrila Development Bank Ltd also saw considerable strength and shot up by over 8 percent. On Monday, Everest Insurance Company Ltd reported a notable year-on-year growth in its after tax profit from Rs 40 million in the year earlier to Rs 193 million in the fiscal year 2019/20.

On the flipside, Dibyashwori Laghubitta Bittiya Sanstha Ltd and Gurans Laghubitta Bittiya Sanstha Ltd suffered the most with the scrips shedding 5.7 percent and 4.76 percent, respectively. Khanikhola Hydropower Company Ltd and Best Finance Ltd tumbled around 4 percent each. Other major decliners for the day include Ghalemdi Hydro Ltd, Joshi Hydropower Development Company Ltd and Manjushree Finance Ltd.

In another major announcement, Siddhartha Bank Ltd published its fourth quarter financials reporting a marginal decline in its net profit. Its net profit fell to Rs 2.09 billion from Rs 2.26 billion in the year earlier. Despite increased net interest earnings, the banks net profit suffered attributable to notably higher impairment charges compared to the previous fiscal year.

On the technical front, the index formed a large bullish candlestick, substantiating its rebound from the support zone at around 1,350-1,360 points. Consequently, the index broke the psychological 1,400-point mark with noteworthy volume suggesting bulls dominating the recent sessions. Both Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) reflect subsiding selling pressure. The index has some room for further upward movement before facing some resistance at 1,460-1,470 point’s level.

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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