Daily market commentary

Nepse erases some of previous day's gains

Published On: July 19, 2019 02:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 19: Stocks made a strong start on Thursday as the Nepal Stock Exchange (Nepse) index climbed above 1,280 points in the first half of the session. Nonetheless, stocks gave up all their earlier gains in the afternoon trading to eventually push the index marginally in the red.

Nepse index ended the last trading day of the week 2.37 points lower at 1,272.49 points. The bourse snapped its four-day winning streak with the modest loss seen on the day. Stocks pared some of its previous day gains as traders resorted to profit-booking following Wednesday's rally. In the meantime, earnings season has kicked off with few companies publishing their annual financials on the day. Hence, the market will set a more concrete tone after investors gauge the overall earnings outlook in the coming months. Market participation remained moderate as only Rs 411 million worth of securities changed hands on the day.

Most of the traded sectors ended the day in red. Only Finance, Manufacturing & Processing and Microfinance sectors logged gains on the day. The Biggest losses came from hotel stocks as reflected by a 1.32% slump in the group's sub-index. Hydropower stocks also struggled as the group's sub-index was down by 0.62%. Similarly, Life Insurance and Non-life Insurance sub-indices witnessed losses of 0.46% and 0.41%, respectively. All other sub-indices edged lower.Chhimek Laghubitta Bikas Bank Ltd Promoter Share was the most active scrip of the day with over Rs 52 million worth of the scrips traded. Shivam Cements Ltd, Nepal Life Insurance Company Ltd and Nepal Bank Ltd followed suit with turnovers of Rs 26 million, Rs 24 million and Rs 22 million, respectively.

Shares of commercial banks were also traded actively on the day.

Nepal Hydro Developers Ltd, among advances, turned in the best performance of the day as its price rallied by 9.24%. Subsequently, Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd, Global IME Laghubitta Bittiya Sanstha Ltd and Dibyashwori Hydropower Ltd posted gains of over 4% each. Nepal Seva Laghubitta Bittiya Sanstha Ltd, United Modi Hydropower Ltd and Naya Nepal Laghubitta Bikas Bank Ltd followed suit.

In contrast, Mero Microfinance Bittiya Sanstha Ltd reported the biggest loss of the day as its share price tanked almost 7%. Next on the list was Nabil Equity Fund which saw its unit price fall by over 5%. Similarly, shares of Asian Life Insurance Company Ltd, Jyoti Bikas Bank Ltd and Panchthar Power Company Ltd came under pressure, registering declines of around 3% each.

On earnings front, First Microfinance Laghubitta Bittiya Sanstha Ltd published its financials for the fourth quarter of FY2018/19, reporting a 31 % year-on-year net profit growth. The micro sector lender's Earning per Share (EPS) stands at Rs 19.46. United Finance Ltd's earnings also saw substantial year-on-year growth. As per its financials, its net profit grew by over 70% to Rs 109 million.As per ARKS technical analysis, the index formed a bearish spinning top candlestick with a long upper wick reflecting the selling pressure seen toward the session's close. However, the drop can only be taken as a correction unless the losses are amplified further in the coming sessions. Both Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest slight strength visible in the secondary market in the present context.

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