Daily market commentary

Nepase begins week with a 12-point drop

Published On: October 15, 2019 12:22 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Oct 14: The Nepal Stock Exchange (Nepse) index, which traded slightly in the green on Monday morning, quickly gave up its gains to descend below the opening level in the latter trading hours.

A steady decline saw the benchmark index drop 12.05 points to 1,136.96 points.
Local stocks, which saw some strength ahead of Dashain, have failed to stretch its gains after the holidays. Nonetheless, range bound trading has persisted suggesting some consolidation in action after 3-month-long downfall. Hence, stocks can be expected to see further modest moves within the consolidation range until Tihar.

In the bland trading session, majority of the investors remained off their trading desks on Monday with the bourse registering a sub-par turnover of Rs 219 million.
On the sectoral front, all of the major sub-indices closed the day in red, barring Mutual Fund sub-index which climbed marginally higher. Biggest loss came from the Hotels segment driven by a sharp decline in shares of Oriental Hotels Ltd. Hotels sub-index tanked 2.91%. Banking, Non-Life Insurance and Finance stocks also suffered with the respective sub-indices sinking over 1% each. Hydropower and Microfinance sub-indices also gave up almost 1% each. Subsequently, all other sub-indices saw modest drops in the session.

Shares of Prabhu Bank Ltd and Siddhartha Bank Ltd led the list of actives with turnovers of over Rs 26 million each. Next, shares of Nabil Bank Ltd were also heavily traded. More than Rs 12 million worth of the bank's shares changed hands. Mega Bank Ltd Promoter Share and Nepal Life Insurance Company Ltd posted turnovers of Rs 11 million and Rs 9 million, respectively.

Few hydropower scrips saw major strength in the day. Shares of Radhi Bidyut Company Ltd rallied 5.84%, while those of Hydroelectricity Investment and Development Company Ltd jumped 4.51%. 
Likewise, City Express Finance Co. Ltd closed over 4% higher. Civil Laghubitta Bittiya Sanstha Ltd also posted an advance of almost 4%. Other energy stocks followed suit with Ankhu Khola Jalvidhyut Company Ltd, Joshi Hydropower Development Company Ltd and Arun Valley Hydropower Development Co. Ltd registering gains of over 3% apiece.

Energy stocks also led the list of decliners. Synergy Power Development Ltd tumbled 6.59% followed by Arun Kabeli Power Ltd and Sanima Mai Hydropower Ltd which gave up more than 5% each. 

Correspondingly, Goodwill Finance Ltd posted a decline of 5%. Oriental Hotels also slid 5% ahead of its book closure for upcoming Annual General Meeting (AGM). The bank had proposed 5% stock dividend and 10.79% cash dividend which is due for approval in the meeting.

On the announcement front, Everest Bank Ltd declared dividend for Fiscal Year 2018/19. While 20% of the dividend will be distributed as cash, remaining 5% will be distributed in the form of bonus shares. Similarly, Mithila Laghubitta Bikash Bank Ltd announced 15% stock dividend to its shareholders. Both, proposals are due to be approved from their respective AGMs.

As per the ARKS technical analysis, the market formed a bearish candlestick reverting from its 20-day Exponential Moving Average (EMA). Hence, some resistance is visible at around 1,150 points. 
Further, the index is also in the verge of forming a symmetrical triangle pattern.

This indicates both supply and demand approaching equilibrium in the secondary market. Hence, a breakout on either side of the triangle pattern will indicate a possible direction of the equity market for the short run. For a notable shift in momentum, a breach of 1,180 points backed by substantial volume is crucial.

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