Daily market commentary

Nepse ends week with a modest drop

Published On: March 6, 2020 09:44 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: The secondary market faced indecision throughout the trading session on Thursday. The last trading day of the week started with a sharp dip followed by a quick recovery. However, sellers gained control at mid-session with the Nepal Stock Exchange (Nepse) index trading mostly in red in the afternoon. At the close, the index saw a modest loss of 5.50 points to end the week at 1,435.70 points. 

The index, which saw sharp correction after late February rally, witnessed notable retracement in the first five trading sessions of March. With the index turning red on Sunday with record volume, investors held back on taking long positions, while sellers switched to panic selling which pushed the broader index down by roughly 200 points in the week. Shareholders of microfinance scrips saw the biggest losses as microfinance scrips tanked this week, while other sectors also witnessed major corrections. However, some buying positions were visible on the day as the index has pulled back to normalcy. With the drop in the index, sellers are also showing signs of exhaustion as volumes continue to dip. Turnover dropped to Rs 2.45 billion against Rs 3 billion a day earlier.

Sectors ended the day mixed, contributing to marginal movements of the broader index. Microfinance stocks saw strength as the group’s sub-index jumped by 2.13%. Development Bank and Finance sectors also saw gains and closed 1.13% higher. Further, Life Insurance and ‘Others’ sectors inched marginally higher. On the other hand, Trading sub-index tanked 2.03% while Hotels, Manufacturing & Processing and Mutual Fund sectors saw declines of over 1% each. The sub-index of market heavyweight Banking sector was also down 1.11%.

Nepal Life Insurance Company Ltd continued to see active market participation as more than Rs 378 million worth of the life insurer’s shares were traded on the day. Next on the list was NMB Bank Ltd as over Rs 126 million worth of shares changed hands. NIC Asia Bank Ltd, Manjushree Finance Ltd and Nabil Bank Ltd posted turnovers of Rs 96 million, Rs 84 million and Rs 65 million, respectively. Himalayan Distillery Ltd, Prabhu Bank Ltd and Global IME Bank Ltd were among other actives of the day.

Shares of Manjushree Finance Ltd saw major strength, rallying by 10%. Radhi Bidyut Company Ltd and Bottlers Nepal Terai Ltd closely followed with advances of over 9% and 8%, respectively. Few microfinance companies recouped some of their week’s losses as share prices of Janautthan Samudayik Laghubitta Bikas Bank Ltd, Ganapati Microfinance Bittiya Sanstha Ltd and Vijaya Laghubitta Bittiya Sanstha were up by over 6%. On the other hand, Nepal Hydro Developers Ltd and newly-listed Himal Dolakha Hydropower Company Ltd remained locked to the lower circuit after the respective prices tanked almost 10%. Mithila Laghubitta Bittiya Sanstha Ltd and Union Hydropower Company Ltd each saw their share prices close 6% lower. Further, share prices of Oriental Hotels Ltd, IME General Insurance Ltd and Chhyangdi Hydropower Ltd were also down over 4% each.

ARKS technical analysis indicates the market witnessing some indecision on the day with the formation of a small bearish spinning top candlestick. While technical indicators still point to a short term bearish outlook, selling pressure has slightly lost its steam. The market tested its psychological support of 1,400 points in the morning and held ground above the respective mark. Hence, the market might see some consolidation around the current range. A rebound will present opportunity to go long, while a breach of the support might suggest further possibility of south-bound movement.

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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