Slug: Daily market commentary

Nepse closes higher for third straight day

Published On: February 4, 2020 09:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 4: Stock opened trading on a firm note on Monday with Nepal Stock Exchange (Nepse) index adding roughly 9 points in the morning session. However, dragged by some selling pressure, the benchmark index turned red quickly. Subsequently, the index recouped its losses and wavered along the opening level for most of the remaining trading session. At the close, Nepse notched a 2.49 point gain to settle at 1,349.13 points.

The index stretched its winning run for a third straight day, clocking a new high. However, the rally has slightly lost steam as reflected by the range-bound trading on the day. Both buyers and sellers were active in the session, keeping the market from making any major moves toward either side. The indecision among investors can also be attributed to the market trending around its multiyear high where both an extension of the rally and a pullback is probable making next day's trading crucial for the secondary market. Another active trading was witnessed with the exchange recording a turnover of Rs 1.61 billion.

Sectors witnessed mixed performance. Leading the gains was Hydropower sub-index which shot up by 4.82%. Development Bank sector also saw strength with its sub-index rising by 1.69%. Non-life Insurance, Mutual Fund and 'Others' segments also closed the day in green. On the other hand, Hotels sub-index was down 0.83 %, while Life Insurance sub-index fell by 0.57%. Microfinance, Trading, Banking, Finance and Manufacturing & Processing sub-indices also ended the day lower.

Shares of Neco Insurance Co Ltd were traded heavily in the local bourse with a turnover of over Rs 65 million. Correspondingly, Global IME bank Ltd and Nepal Insurance Co Ltd logged turnovers of around Rs 50 million each. Grameen Bikas Laghubitta Bittiya Sanstha Ltd, Prabhu Bank Ltd and Garima Bikas Bank Ltd posted turnovers of at least Rs 40 million each.

Share prices of three companies hit the upper circuit in the session. Garima Bikas Bank Ltd, National Hydropower Company Ltd and Chhyangdi Hydropower Ltd saw their share prices jump by more than 9%. Other energy stocks followed suit as Rasuwagadhi Hydropower Ltd, Sanima Mai Hydropower Ltd and Chilime Hydropower Company Ltd posted gains of 8.54%, 8.5% and 7.78%, respectively.

Multipurpose Finance Company Ltd, on the flipside, saw considerable pressure as reflected by a 5.23% drop in its share price. Union Hydropower Ltd also saw its share value fall by 3.51%. Samriddhi Finance Company Ltd, Goodwill Finance Company Ltd and Vijaya Laghubitta Bittiya Sanstha Ltd saw declines of over 2% each.

In corporate space, Kumari Bank Ltd reported a net profit of Rs 803 million in the second quarter of fiscal year 2019/20. The bank had posted Rs 676 million earnings in the same quarter of the previous year. Similarly, as per Machhapuchhre Bank Ltd's financials for the second quarter, the commercial bank's profit after tax stands at Rs 822 million – a modest gain of 5% year on year.

On technical front, the index formed a spinning top candlestick suggesting indecision in the bourse. With the index trending in the resistance area, the movement toward either direction is highly likely. Nonetheless, technical indicators suggest bullish outlook in the secondary market of late. Hence, extension of rally above 1,350 points in the coming session might see the index register another rally toward 1,400 points.

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