KATHMANDU: Stocks began trading on a positive note on Monday as Nepal Stock Exchange (Nepse) index added more than 16 points in the morning session. However, it fell in the negative territory as sellers prevailed in the latter trading hours as the index witnessed a decline to close the day with a 26.54 points retracement at 1,317.11 points.
After an 80-point rally in previous three trading sessions, bears prevailed on Monday as traders resorted to profit booking. The broader index saw a heavy drop as most sectors pulled back sharply. Many view the drop as another healthy correction as opposed to a reversal. However, investors are likely to trade cautiously in the next few sessions. The market saw daily turnover of nearly Rs 2 billion on the day.
Trading sector was the biggest laggard of the day as the group's sub-index slid 6.34%. Hydropower, Finance and Hotels sectors followed suit with losses of over 3% each. Further, Development Bank, Microfinance, Life Insurance and Non-life Insurance sub-indices posted losses of at least 2% each. All other sectors closed the day in red.
Among active stocks, Himalayan Distillery Ltd registered the highest transaction of the day with more than Rs 209 million worth of shares traded. Nepal Credit and Commerce Bank Ltd, correspondingly, saw turnover of Rs 133 million. Nepal Life Insurance Company Ltd, Prabhu Bank Ltd and NIC Asia Bank Ltd posted turnovers of Rs 93 million, Rs 67 million and Rs 60 million, respectively.
Multipurpose Finance Ltd, however, bucked the trend as its share price hit the upper circuit of 10%. Global IME Bank Ltd opened trading after merger with Janata Bank Nepal Ltd on Monday. On its first trading day post-merger, the bank saw its share price rally by 9.72%. Surya Life Insurance Company Ltd and Prudential Insurance Company Ltd, meanwhile, added more than 2% on their respective share prices. Units of NIC Asia Balanced Fund, Synergy Power Development Ltd and Manjushree Finance Ltd also closed the day slightly higher.
On the other hand, Panchthar Power Company Ltd witnessed the worst performance of the day as its share price tanked 10%. Pokhara Finance Ltd, Himal Power Partner Ltd and Bishal Bazar Company Ltd's shares also came under considerable pressure as each lost over 9% on their respective prices. Other hydropower stocks followed suit as share prices of Panchakanya Mai Hydropower Ltd, Himalayan Urja Bikas Company Ltd and United Modi Hydropower Ltd tumbled over 8% each.
On earnings front, Citizens Bank Ltd published its financials for the second quarter on the day. As per the report, the company's earnings fell by over 10% year-on-year to Rs 688 million. The drop is mainly due to a decline in its net interest income.
As per the ARKS technical analysis, the market formed a bearish candlestick on the daily timeframe suggesting dominance of sellers in the market. The correction came on the back of Sunday's massive gain. Meanwhile, technical indicators show the market losing some steam. Nonetheless, the outlook still remains upbeat as the benchmark index is still trending close to its yearly high. An immediate psychological support lies at 1,300 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)