Daily Commentary

Nepse corrects 4 points to cap-off firmly upbeat week

Published On: August 28, 2020 09:13 AM NPT

KATHMANDU, Aug 27: The local stock market opened in green on Thursday, the last trading day of the week. After trading around 10 points higher briefly in the morning, the Nepal Stock Exchange (Nepse) index witnessed a sharp pullback to trade around 4 points lower before mid-day. Thereafter, the index gyrated along the opening level throughout the afternoon, finally closing the day with a modest loss of 4 points at 1,458.04.

The index finally saw the end of its five-day rally on profit booking by traders. While the trading volumes as well as the general sentiment remains positive, selling on quick profits pulled the index slightly lower. Nonetheless, the stocks market has continued to see active market participation. Total turnover on the day stood just shy of Rs 2 billion mark.

On Thursday’s broad correction, most of the sectors saw losses, while a few managed to eke out minor gains. Manufacturing & Processing sector was the outperformer with a gain of 1.44 percent. Meanwhile, Non-Life Insurance and Life Insurance sub-indices edged slightly higher. Major loss came from Trading scrips. The sub-index tumbled 1.64 percent. Hotels and Development Bank sub-groups also came under pressure and closed down by over 1 percent each. All other sectors saw moderate to minor declines in the session.

Nepal Reinsurance Company Ltd, despite seeing a drop in turnover, maintained the lead among active stocks. Over Rs 231 million worth of its shares were exchanged on Thursday. Neco Insurance Company Ltd followed suit with turnover of over Rs 124 million. Shivam Cements Ltd, NIC Asia Bank Ltd and Nepal Life Insurance Company Ltd posted turnovers of Rs 95 million, Rs 83 million and Rs 74 million, respectively.

On the gainers front, shares of NRN Infrastructure and Development Ltd rallied 10 percent on Thursday. Similarly, Dibyashwori Hydropower Ltd and Shivam Cements Ltd rallied over 5 percent each. Kalika Power Company Ltd and Nabil Balanced Fund 2 posted gains of over 4 percent. Other energy stocks followed suit.

Conversely, Samudayik Laghubitta Bittiya Sanstha Ltd and Gurans Laghubitta Bittiya Sanstha Ltd shares came under pressure shedding over 4 percent each. Ridi Hydropower Company Ltd and Bishal Bazar Company Ltd’s shares also struggled dropping around 3.9 percent apiece. Mahalaxmi Bikas Bank Ltd, Ghalemdi Hydro Ltd and Samriddhi Finance Company Ltd registered declines of over 3 percent.

In the news, First Microfinance Laghubitta Bittiya Sanstha Ltd announced a dividend for the year 2019/20. As per its notice, the wholesale microfinance has proposed 9.5 percent bonus shares and 4.18 percent cash dividend to its shareholders. The proposal is subject to approval from Nepal Rastra Bank (NRB).

As per ARKS technical analysis, the index formed a small bearish candlestick on Thursday, after testing resistance at around 1,470 points twice in two days. Hence, some correction was seen in the equity market after 5 straight days of gains. However, technical indicators suggest that the momentum clearly favors the bulls in spite of the retracement. While some further correction can also be expected, a breach of 1,470-1,480 points will point out towards more upside movement in the equity market. Meanwhile, immediate support lies at around 1,430 points mark.

This column is produced by ARKS Capital Advisors Ltd

(Views expressed in the article are those of the producer and do not necessarily reflect those of this publication)


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