Weekly Market Commentary

Nepse ends week higher, buoyed by insurance stocks

Published On: December 7, 2019 12:25 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Indecision prevailed in the initial trading days of the week as flat trading marked Sunday and Monday's sessions. The Nepal Stock Exchange (Nepse) index inched 0.06 points higher on Sunday, while Monday saw a modest dip of 0.86 points. 

Stocks saw some strength on Tuesday with the index climbing 3.75 points. The exchange extended its gains in the latter trading days. On Wednesday, the index posted a gain of 8.73 points. Subsequently, Nepse rose 7.45 points on the last trading day of the week. Overall, the benchmark index closed the week with a gain of 19.13 points or 1.72% at 1,131.92 points.

Dividend announcements in the months earlier as well as recent earning results failed to uplift investors' sentiment in the weeks earlier. However, following a continuous slump to its multi-year low at around 1,100 points, the index found some ground as buyers resorted to accumulating stocks at some of the cheapest levels. Investors going long on insurance stocks in the week, which were among the hardest hit sectors, helped drive the market notably higher. Market participation also improved slightly in the review period. More than Rs 1,372 million worth of securities changed hands.

Reflecting Class 'A' stocks' performance, Sensitive Index edged 0.86% higher. On the sectoral front, insurance segments led this week's rally. Life Insurance and Non-Life Insurance sub-indices shot up by 8.59% and 4.29%, respectively. Microfinance sub-index also jumped 4.35%. Meanwhile, hydropower segment recovered 2.41%. 'Others', Hotels and Mutual Fund sub-indices also rose over 1% each. All other sectors closed the week in green. Heavyweight banking sub-index added 0.51%.

Among actives, Nepal Life Insurance Company Ltd posted the highest turnover of Rs 105.20 Million. It was followed by shares of NMB Bank Ltd which saw a turnover of over Rs 95 million. NIC Asia Bank Ltd, Janautthan Samudayic Laghubitta Bittiya Sanstha Ltd, Nabil Bank Ltd, Himalayan Distillery Ltd logged in turnovers of Rs 65.14 million, 46.49 million, 45.98 million and 45.24 million, respectively. Nepal Bank Ltd, Siddhartha Bank Ltd Promoter Share, Prime Commercial Bank Ltd were among other top turnover stocks in the week.

On the corporate front, two commercial banks of Nepal, Global IME Bank Ltd and Janata Bank Ltd, have merged and begun a joined transaction on Friday. The merged bank has been named Global IME Bank Ltd and with the merger, the number of commercial banks has dropped to 27 from 28. 

On the announcement, Kanchan Development Bank Ltd has proposed to distribute 10% bonus shares and 7% cash dividend to its shareholders from the profit earned in FY2018/19. The decision is subject to approval from Nepal Rastra Bank and upcoming development bank's annual general meeting (AGM). After the adjustment of bonus shares, the paid-up capital of the company will reach to Rs 584.4 million.

The market formed a bullish candlestick on the weekly timeframe recouping all its prior week's losses. As per ARKS technical analysis, the index is on the verge to form a reversal candlestick pattern, which will be completed after another bullish candlestick formation in the coming week with increased volumes. Momentum indicators also suggest that bulls are gaining control over the market, albeit on a relaxed pace. Meanwhile, investors must keep a close eye on 1,150 points resistance, as its breach can further fuel the equity market's recovery.

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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