Daily market commentary

Nepse begins week in the red

Published On: July 22, 2019 11:37 AM NPT By: Republica

KATHMANDU: Stocks came under some pressure in the beginning hour of Sunday's trading session. The benchmark Nepal Stock Exchange (Nepse) index dropped to around 1,266 points mark at mid-session. Nonetheless, the selling pressure subsided in the remaining trading hours as the index traded flat thereafter. Nepse eventually closed the first trading day of the week 3.75 points lower at 1,268.74 points.

Nepse index added to Thursday's decline as the market fell below the 1,270-point level. Meanwhile, market activity remained substantially low as only Rs 298 million worth of shares were traded on the day.

Investors have remained largely dormant after CDS and Clearing Ltd published a notice on July 16, stating that new capital gains tax (CGT) calculation method will be implemented from the beginning of the new fiscal year i.e. July 17. Though the method is scientific, investors were against its implementation as it requires them to fill paper forms and provide the weighted cost themselves to broker office. Further, in case investors are unable to provide the cost of any transaction, the CGT will be calculated with cost as face value of the respective share. Hence, investors unable to present buying details will be liable to pay substantially more taxes in many cases. Thus, trading remained largely affected on Sunday.

Most of the sectors closed lower mirroring the broader index. Only 'Others' and Finance sub-indices eked out marginal gains. Manufacturing & Processing sub-index fell the most and closed 1.13% lower. Hydropower and Hotels sub-indices followed suit with losses of 0.79% and 0.7%, respectively. All other sub-indices closed the day in red. Heavyweight Banking sub-index was also down by 0.26%.

Civil Bank Ltd was the active stock of the day. The commercial bank posted a turnover of over Rs 26 million. Next on the list were Shivam Cements Ltd and Nabil Bank Ltd with turnovers of over Rs 15 million each. Nepal Life Insurance Company Ltd, Prabhu Bank Ltd and Upper Tamakoshi Hydropower Ltd were among other active stocks of the day.

Among advances, Swabhimaan Laghubitta Bittiya Sanstha Ltd logged the highest gain of 5.5%. Similarly, Multipurpose Finance Company Ltd saw its share price shot up by 5%. Share prices of Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd and Nerude Laghubitta Bikas Bank Ltd also registered advances of over 3% each. Lumbini Bikas Bank Ltd, City Express Finance Co. Ltd and Panchakanya Mai Hydropower Ltd were other gaining stocks of the day. 

In contract, Energy stocks led the decline. Union Hydropower Ltd and Dibyashwori Hydropower Ltd saw their respective share prices fall by 9.64% and 6.76%. Similarly, unit price of Nabil Equity Fund was down by 4%, while National Microfinance Bittiya Sanstha Ltd, Civil Laghubitta Bittiya Sanstha Ltd and Arun Valley Hydropower Development Co. Ltd saw their respective share prices fall by over 3% each.

Among companies publishing their earnings report for the fourth quarter of FY2018/19, Citizens Bank International Ltd reported a 20% year-on-year net growth in its net profit to Rs 1,488 million. The commercial bank's Earnings per Share (EPS) stands at Rs. 17.78. Similarly, 

Chautari Laghubitta Bittiya Sanstha Ltd also saw a substantial increase in its net profit. Its earnings grew by over 170% to Rs 28 million. 

As per ARKS technical analysis, the market formed a second bearish candlestick on the daily timeframe. Nonetheless, the index has held ground above its 20-day Exponential Moving Average (EMA). Technical indicators also suggest neutral to bullish sentiment existing in the equity market. Immediate resistance lies at 1,275 points while the support is seen at 1,240 points mark.

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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