Daily market commentary

Nepse down for fourth session in broad slump

Published On: August 7, 2019 04:30 AM NPT By: Republica

KATHMANDU, Aug 7: The equity market began Tuesday's trading on feeble note and continued to remain under pressure throughout the session. Following the steady decline, the Nepal Stock Exchange (Nepse) index closed the day with a loss of 9.36 points. Nepse closed Tuesday's trading slightly above its session's low at 1,245.73 points.

The broad sell-off saw the index fall for four days in a row. Investors took a significantly defensive approach and resorted to taking short positions amid fears of further downfall in the equity market.

Despite remarkable improvement seen in quarterly financials of listed companies, the market has failed to find any foothold of late. Meanwhile, market participation remained moderate with a total transaction worth Rs 450 million.

Hit hard in the day were Manufacturing & Processing, Microfinance, and Hotels stocks. The respective sectors fell more than 1 percent. Mutual Fund and Banking sub-indices followed suit with losses of 0.91 percent and 0.83 percent. All other sectors closed the day lower contributing to the notable slump in the broader market.

In terms of market activity, Agriculture Development Bank Ltd was the most heavily traded scrip on the day. The government-owned bank published its fourth quarter financials on the day reporting a 19 percent growth in its net profit. Its earnings stand at Rs 4.35 billion. Next, Nepal Bank Ltd logged in a total turnover of over Rs 41 million. NIC Asia Bank Ltd and Prabhu Bank Ltd followed suit with turnovers of Rs 19 million and Rs 13 million, respectively. Lumbini Bikas Bank Ltd, Siddhartha Bank Ltd and Nabil Bank Ltd's shares were also actively traded.

Shares of Joshi Hydropower Development Company Ltd led the advances. The scrip's price rose 2.74 percent. Similarly, Gurans Life Insurance Company Ltd, Laxmi Laghubitta Bittiya Sanstha Ltd and Kalika Power Company Ltd climbed over 2 percent each. Sanima Equity Fund, Laxmi Value Fund-1 and United Modi Hydropower Ltd were among other gaining scrips.

On the other hand, Support Microfinance Bittiya Sanstha Ltd tanked 10 percent. The microfinance published its fourth quarterly financials on the day reporting 120 percent year-on-year growth in its net profit to Rs 5.45 million. However, its Earnings per Share (EPS) stands at only Rs 9.08. Other microfinance scrips followed suit. Sparsha Laghubitta Bittiya Sanstha Ltd and Swabhimaan Laghubitta Bittiya Sanstha Ltd also tumbled over 9 percent each. Shares of Nepal Agro Laghubitta Bittiya Sanstha Ltd, Gurans Laghubitta Bittiya Sanstha Ltd and Global IME Laghubitta Bittiya Sanstha Ltd also suffered significant losses.

Prime Life Insurance Company Ltd became the first life insurer to publish its fourth quarter financials of Fiscal Year 2018/19. The insurer saw its earnings grow substantially to Rs 313 million compared to Rs 216 million in the year earlier.

In other news, Sanjen Jalavidhyut Company Ltd and Rasuwagadhi Hydropower Company Ltd marked their first trading day in the exchange. Despite opening the day at the higher limit of the opening range, both scrips fell from their initial prices. At the close, the former traded at Rs 261 per share, while the latter ended the day at Rs 263 per share.

As per the ARKS technical analysis, the market formed a fourth bearish candlestick on the daily timeframe. Momentum has shifted to bears markedly and the index is now on the verge of testing its support at 1,240- 1,250 points range. The breach of 1,240 points with significant volumes might see the index falter further towards 1,200 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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