Daily market commentary

Nepse begins week in red

Published On: November 18, 2019 09:16 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: After trading higher briefly in the morning, the Nepal Stock Exchange (Nepse) index fell slightly after mid-day. Subsequently, the index hovered below the opening level for the remaining trading hours. Nepse closed Sunday's trading with a loss of 4.59 points at 1,131.36 points.

With the day's decline, the bourse erased its gains that came on Thursday last week stretching its sideways movement further. The dividend announcements of late gave some respite to investors putting a halt to the persisting downtrend. However, corporate earnings overall saw modest growth, consequently failing to provide any major impetus to drive the equity market's recovery. Turnover saw some improvement with over Rs 355 million worth of securities exchanged in the session.

Most of the major sectors closed in the red. Trading sub-index bucked the trend and rose 7.41%, while 'Others' sector inched marginally higher. Manufacturing & Processing sub-index tanked 4.22% with significant losses coming from Shivam Cements Ltd. Hotels sector also tanked 2.91% dragged by all listed hotel scrips. Hydropower and Finance sub-indices, meanwhile, shed over 1% each. All other sectors closed marginally lower. Heavyweight banking sector's sub-index closed almost unchanged.

Shivam Cements Ltd led the list of top turnover scrips. More than Rs 40 million worth of the cement manufacturer's shares changed hands. NIC Asia Bank Ltd also saw a total turnover of almost Rs 40 million. Last week, the commercial bank reported a net profit of over Rs 1 billion in the first quarter. NMB Bank Ltd and Nepal Bank Ltd, correspondingly, saw turnovers of at least Rs 31 million apiece. Himalayan Distillery Ltd, Prime Commercial Bank Ltd and Century Commercial Bank Ltd were among other active scrips of Sunday.

Salt Trading Corporation hit upper circuit of 10% stretching its rally further. Ghodighoda Laghubitta Bittiya Sanstha Ltd and Panchthar Power Company Ltd also jumped over 9%. Janautthan Samudayic Laghubitta Bikas Bank Ltd and Ganapati Microfinance Bittiya Sanstha Ltd posted gains of 7.31% and 6.25%, respectively. Ankhu Khola Jalvidhyut Company Ltd and Synergy Power Development Ltd, meanwhile, added over 5% apiece.

On the other hand, Shivam Cements Ltd tanked 10% after the manufacturer reported almost 50% decline in its first quarter net profit weighed by major sales decline. Oriental Hotels Ltd also tumbled 6.36%. The hotel also saw its net profit slump by over 65% attributed to drop in its revenue from operations. Further, Goodwill Finance Co bLtd, Khanikhola Hydropower Co Ltd and Universal Power Company Ltd's shares closed over 5% lower.

Among major companies publishing their first-quarter earnings results, Mega Bank Ltd reported an 8% growth in its net profit to Rs 437 million. Beverage manufacturer Himalayan Distillery Ltd saw its earnings expand by over 50% to Rs 98 million. On the flipside, Nepal Telecom Ltd reported a 10% drop in its net profit. As per its financial report, its current profit after tax stands at Rs 3.25 billion.

As per the ARKS technical analysis, the market formed a small bearish candlestick on the daily timeframe closing near 1,130 points mark. Sellers remained slightly dominant on the day as most of the major stocks suffered. Technical indicators also suggest absence of any significant momentum in the present context. Nepse is likely to continue to trend range bound with resistance at 1,150 points and support at 1,120 points.

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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