Daily Market Commentary

Nepse closes higher as budget lifts investor sentiment

Published On: May 31, 2019 04:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 31: The benchmark Nepal Stock Exchange (Nepse) opened the day on a firmly bullish note starting the day's trading more than 10 points higher. The index shot up to almost 1,350 points in the first 15 minutes of trading, but witnessed a steady decline throughout the remaining trading hours. At the close, the index logged a modest gain of 5.58 points to end the week at 1,319.47 points.

Following the budget announcement on Wednesday evening, investors seemed fairly upbeat in the morning session. All traded sectors traded in green initially. However, the index gave up some ground following active profit booking seen in the afternoon.

With regards to financial market, reduction of capital gains tax on share transactions of individual investors to 5 percent from 7.5 percent is the major highlight of the budget. Further, tax calculation on bonus and right shares will be based on weighted average cost method. Besides, through the budget, the government has also adopted a policy of encouraging merger of Banking and Financial Institutions (BFIs) and insurance companies.

Market participation increased significantly on Thursday as the local bourse registered total turnover of over Rs 1,528 million against Rs 900 million a day earlier.

Though the major average closed in green, most of the sectoral indices closed lower. Banking sub-index led the gains with a 0.94 percent advance. Sub-indices of Mutual Fund, 'Others' and Life Insurance scrips also eked out marginal gains. On the other hand, losses came from Hotels and Manufacturing scrips, with the respective sub-indices shedding 0.87 percent each. Further, Hydropower and Development Bank sub-indices fell by 0.41 percent and 0.28 percent, respectively. All other sub-indices edged marginally lower.

Shivam Cements Ltd and Nepal Bank Ltd were the most actively-traded stock in the session with turnover of Rs 172 million and Rs 166 million, respectively. Next, Prabhu Bank Ltd, Upper Tamakoshi Hydropower Ltd and Nepal Credit and Commerce Bank Ltd saw turnovers of Rs 110 million, Rs 92 million and Rs 63 million, respectively. Other commercial banks followed suit.

Himalayan Urja Bikas Company Ltd was the highest gainer of the day. Its share price rallied almost 10 percent. Similarly, shares of Rairang Hydropower Development Company Ltd shot up by over 8 percent, while unit price of NIC Asia Growth Fund appreciated by 6.41 percent. Green Development Bank Ltd, World Merchant banking and Finance Ltd and Multipurpose Finance Company Ltd also saw their share prices go up by 5 percent each.

In contrast, shares of Panchthar Power Company Ltd tanked to hit the negative circuit of 10 percent. Secondly, share price of National Microfinance Bittiya Sanstha Ltd tumbled by over 5 percent on the day. Furthermore, Kankai Bikas Bank Ltd, Best Finance Company Ltd, Mahila Sahayatra Microfinance Bittiya Sanstha Ltd and Synergy Power Development Ltd saw their share prices go down by over 4 percent each.

ARKS technical analysis indicates the market forming a shooting star candlestick, reflecting significant selling pressure seen after morning rally. Despite witnessing gains, the index pulled back below resistance level of 1,320 points. Hence, the index is still testing the respective resistance mark. Technical indicators, meanwhile, suggest that the market is yet to witness any significant buying momentum. A close above 1,320-point mark with substantial volume will make further upward movement likely.

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