Daily market commentary

Nepse ekes out marginal gains

Published On: December 26, 2019 09:43 AM NPT

KATHMANDU: The local bourse witnessed choppy trading in Wednesday morning before witnessing a sharp rise at mid-session. Nonetheless, the Nepal Stock Exchange (Nepse) index trimmed most of its earlier gains in the latter trading hours but managed to close the day in green. Nepse closed the day at 1,168.03 points – up 1.82 points against the previous session. 

With some correction witnessed on Tuesday, the index only saw modest movements on Wednesday but managed to hold ground with the index trading mostly in green throughout the session. Despite the index giving up gains in the afternoon, the bearish momentum subsided in the final hours suggesting absence of sustained selling pressure. Hence, overall sentiment remains upbeat. Total turnover stood above half billion mark. 

Life Insurance sector led the gains as the group's sub-index rose 1.25%. Manufacturing & Processing and Non-Life Insurance sub-indices, subsequently, added 0.84% and 0.36%, respectively. Hotels, 'Others', Development Bank, Mutual Fund and Banking segso witnessed modest gains in the session. On the other hand, Trading sector fell 0.39%. Microfinance, Hydropower and Finance sub-indices also suffered with meager declines. 

Among top turnover securities, more than Rs 48 million worth of Sanima Bank Ltd Debenture 2085 changed hands on the day. Similarly, Nepal Bank Ltd and Prime Commercial Bank Ltd posted turnovers of Rs 45 million each. Shivam Cements Ltd, Machhapuchhre Bank Ltd and Nepal Life Insurance Company Ltd followed suit with turnovers of at least Rs 33 million apiece.

Two companies hit upper circuit on the day as Nepal Seva Laghubitta Bittiya Sanstha Ltd and Kanchan Development Bank Ltd rallied over 9% each. Shrijana Finance Ltd also shot up by 3.8% each. Shares of Himalayan Bank Ltd jumped 3.41%. As directed by Nepal Rastra Bank (NRB), the bank will be floating over 28 million Further Public Offering (FPO) shares to maintain public shareholding ratio to 30%. Currently, the banks promoter to public shareholding structure stands at 85%: 15%. Support Microfinance Bittiya Sanstha Ltd and Nepal Life Insurance Company Ltd were among other top advances with both adding over 3% on the respective prices.

In contrast, Nepal Finance Ltd turned in the worst performance of the day as its share price tumbled 10%. Samriddhi Finance Company Ltd and Union Hydropower Ltd's shares also came under considerable pressure with both scrips shedding over 7% each. 

Other losing scrips include, United Finance Ltd, Himalayan Urja Bikas Company Ltd and Mithila Laghubitta Bittiya Sanstha Ltd which declined more than 3% on the day. 

In terms of ARKS technical analysis, the equity index formed a small bullish candlestick erasing some of its previous day's losses. Hence, the index has held ground around the current level as the sentiment seems fairly neutral. Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) also shows lack of any significant momentum. 

A breach of 1,180 points to the upside can present opportunity to go long. On the other hand, given the index drops further, buying position can also be taken on a rebound from 1,150 points level.

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)

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