Daily Market Commentary

Nepse ends slightly higher as selling pressure subdues

Published On: February 6, 2019 09:39 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Stocks came under slight pressure at the beginning of trading on Tuesday. Nonetheless, the Nepal Stock Exchange (Nepse) index pared its initial losses in the afternoon and maintained a slight positive bias throughout the remaining session. At the close, the index registered a gain of 2.83 points to settle at 1,147.10 points. 

After dropping to the lowest level since the beginning of the year on Monday, the secondary market eased slightly and recouped some of the previous day's losses. Hence, the index has shown a slight sign of a bounce back. However, market activity is still at the lowest level, suggesting a very feeble momentum to indicate a significant recovery in the financial market. Only Rs 231 million worth of shares changed hands on the day.

Strength was visible among most of the major sectors, while only Manufacturing & Processing and Finance sub-indices ended the day in red. Among sectoral indices closing higher, Hydropower sub-index registered a gain of 0.58 percent followed by sub-indices of Microfinance and 'Others' segments which climbed up by 0.47 percent and 0.4 percent, respectively. Similarly, Development Bank and Banking sub-indices were also up 0.37 percent and 0.24 percent, respectively. 

Upper Tamakoshi Hydropower Ltd witnessed the highest market activity on the day. More than Rs 25 million worth of its shares were traded in the market on Tuesday. Next on the list were Citizen Investment Trust and Nepal Telecom Ltd which saw shares of over Rs 14 million and Rs 11 million, respectively, change hands. Citizen Investment Trust reported a modest net profit growth to Rs 190 million in the second quarter of FY2018/19 compared to Rs 182 million in the same quarter of previous year. Shares of commercial banks like NMB Bank Ltd, Nepal Investment Bank Ltd and Civil Bank Ltd were also traded actively on the day.

Samudayik Laghubitta Bittiya Sanstha Ltd led the list of gainers. The micro finance institution's share price rallied to hit the upper circuit of 10 percent. The recently listed microfinance company reported an 85 percent growth in its net profit as per its quarterly earnings report. Likewise, shares of Butwal Power Company Ltd and Radhi Bidyut Company Ltd also went up by over 5 percent each. Laxmi Laghubitta Bittiya Sanstha Ltd and Ankhu Khola Jalavidhyut Company Ltd also added almost 5 percent on their respective share prices.

On the flipside, share price of Purnima Bikas Bank Ltd went down by over 4 percent. Next on the list were Barun Hydropower Company Ltd, City Express Finance Company Ltd and Naya Nepal Laghubitta Bikas Bank Ltd which saw their respective share prices tumble by 3.84 percent, 3.70 percent and 3.67 percent. Best Finance Company Ltd, Central Finance Company Ltd and Mithila Laghubitta Bittiya Sanstha Ltd were among other losing securities.

Other earning results published on the day show increment in respective net profits of Nepal Bangladesh Bank Ltd and Gandaki Bikas Bank Ltd by 70 percent and 30 percent. Among microfinance companies publishing their earnings report, Sana Kisan Bikas Bank Ltd reported a 40 percent growth in its net profit, while the earnings of Forward Community Microfinance Bittiya Sanstha Ltd grew by a modest 7 percent.

As per the ARKS technical analysis, the market snapped its losing run with a small bullish candlestick formation on the daily timeframe, suggesting possibility of a bounce back from the support level at around 1,140 points. Technical indicators, however, suggest that bearish sentiment still prevails in the equity market in the current scenario. Failure to hold ground above the aforementioned level might see the Nepse falter further to drop to 1,120 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)

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