July 14, 2018 08:34 AM NPT
KATHMANDU, July 14: Nepal’s stock market failed to extend gains from the previous week as index ended all five trading days lower. Despite opening with strong gains on Sunday, the market pulled back sharply to close marginally lower. Similarly, the index experienced significant weakness in all following session of the week. As a result, Nepse closed at 1,191.98 points with a drop of 32.43 points compared to preceding week.
With the monetary policy unveiled by Nepal Rastra Bank (NRB) on Wednesday, trading activity showed massive improvement by over 58 percent. This week over Rs. 2,118 million worth of shares were exchanged on the bourse. However, investors seemed unaffected by the approach put forth by the policy.
Despite much speculation regarding an increment in margin on stock based loans, the margin remained at the 50 percent mark. Nevertheless, margin call will now only be made after the value of the stock falls more than 20 percent as compared to the previous 10 percent threshold. On a positive note, the NRB has opened gate for commercial banks to provide brokerage services by registering a separate institution.
Class 'A' stocks-based Sensitive index slid by 2.49 percent in the review period. Similarly, all sub-indices ended in the negative territory. Significant weakness was visible among hotel stocks as it sub-index plummeted by 5.63 percent. Likewise, Insurance and Hydropower Sub-Indices dropped over 4 percent each. Meanwhile, banking sub-index closed 2.40 percent lower.
Everest Insurance Company Ltd led the list of most active stock posting a turnover of over Rs. 152 million. The company is awaiting approval from Securities Board of Nepal (Sebon) for issuance of 105 percent promoter right shares. Next on the list, shares of Prime Life Insurance Company Ltd recorded a turnover of Rs. 107 million. Additionally, Nepal Telecom Ltd, Laxmi Bank Ltd and Chhimek Laghubitta Bittiya Sanstha Ltd were the other active stocks.
In the corporate news, Mega Bank Ltd held its Annual General Meeting (AGM) on Friday. Issuance of 10.75 percent bonus shares was one of its main agendas for the meeting. Further, NMB Bank Ltd has collected Rs. 3.88 billion from its Further Public Offering (FPO) of over 11 million unit's shares. The issue which remained under subscribed for most of the period was finally fulfilled and was oversubscribed by 2.10 percent by Thursday.
As per the ARKS technical analysis, the market witnessed a sharp decline as the index pared all its gains from the previous week. With the index recording losses in all five trading days of the week, the market shows that the bears remain significantly in control towards the end of the fiscal year 17/18.
This week, Relative Strength Index (RSI) tilted further towards the oversold zone while Moving Average Convergence/Divergence (MACD) continued to trend in the negative territory. A short bull run can be expected only if the index crosses and manages to stay above 1,200 points level in the coming sessions.