Daily market commentary

Microfinance and insurance stocks help Nepse stretch winning streak

Published On: December 12, 2019 08:25 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: The Nepal Stock Exchange (Nepse) index climbed around three points in the morning and plateaued thereafter till mid-session. Nonetheless, the index held ground before witnessing a surge late in the afternoon to touch intraday high of 1,166 points. The benchmark index corrected slightly in the final trading hour to eventually end Wednesday's trading at 1,161.47 points – up 10.11 points against the earlier session.

Bulls have persisted in the secondary market as Nepse stretched its gaining streak to seven straight days. The surge was backed by investors flocking to buy insurance and microfinance stocks which faced major slump in the past few months bringing most of the stocks to their multi-year lows. The surge was also accompanied by a steady increase in market participation as Wednesday witnessed a turnover of over Rs 551 million.

The broad rally saw most of the major sectors close in green. Only Manufacturing & Processing sub-index dropped 1.35%. Trading sub-index saw the biggest gain with a 5.9% surge. Microfinance stocks also saw significant strength as the segment jumped 3.54%. 

Similarly, insurance scrips witnessed buying pressure as Non-Life Insurance and Life Insurance sub-indices rallied 2.66% and 1.46%. Hotels, Finance and Development Bank sub-indices registered gains of over 1% each. All other sub-indices inched higher on the day.

Nepal Bangladesh Bank Ltd Promoter Shares led the list of turnovers on Wednesday. Rs 64 million worth of the shares were traded. Shares of Nepal Bank Ltd, Lumbini Bikas Bank Ltd, NMB Bank Ltd, and Deprosc Laghubitta Bittiya Sanstha Ltd posted total transactions of over Rs 30 million, Rs 28 million, Rs 27 million and Rs 20 million, respectively.

Lumbini Bikas Bank Ltd announced its dividend for Fiscal Year 2018/19. The development bank declared 20% dividend to its shareholders including 15% cash dividend and 5% bonus shares. Similarly, Deprosc Laghubitta Bittiya Sanstha Ltd proposed 45% dividend which includes 30% bonus shares and 15% cash payout.

Sana Kisan Bikas Bank Ltd, Prabhu Bank Ltd, Grameen Laghubitta Bittiya Sanstha Ltd, and Swabalamban Laghubitta Bittiya Sanstha Ltd were among active stocks.

Nepal Seva Laghubitta Bittiya Sanstha Ltd, Deprosc Laghubitta Bittiya Sanstha Ltd, United Insurance Co. Ltd, Ganapati Microfinance Bittiya Sanstha Ltd and Naya Nepal Laghubitta Bittiya Sanstha Ltd hit the upper circuit of 10%. Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd, Salt Trading Corporation, Sparsha Laghubitta Bittiya Sanstha Ltd were among other gaining scrips.

On the other hand, Unilever Nepal Ltd, Universal Power Company Ltd and Nepal Bangladesh Bank Ltd Promoter Shares suffered on the day. Each sank over 3%. 

Similarly, shares of Citizen Mutual fund-1, Machhapuchhre Bank Ltd, Rastriya Beema Company Ltd Promoter Share, Sanima Equity Fund and Mountain Hydro Nepal Ltd fell more than 1% each.

As per the ARKS technical analysis, the index formed a bullish candlestick on the daily timeframe extending gains. With the advance, the index has also held ground above 1,150 points mark which has acted as a resistance in the past months. Further, Moving Average Convergence Divergence (MACD) has climbed into positive territory for the first time in four months signaling a shift in short term trend. However, Relative Strength Index (RSI) has reached overbought zone. Hence, cautious buying is suggested in the present scenario.

This column is produced by ARKS Capital Advisors Ltd
(Views expressed are those of the producer and do not necessarily reflect those of this publication)

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