Weekly Market Commentary

Nepse extends gains after prior week's setbacks

Published On: February 1, 2020 12:46 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU: After witnessing notable selling pressure on Sunday, the week's trading was marked by upbeat trading. On the first trading day of the week, Nepal Stock Exchange (Nepse) index tumbled more than 20 points but recouped all its losses on the very next day as Monday saw the index recoup 24 points. Strength carried over to mid-week's trading with the Nepse adding over 5 points on Tuesday. While, the benchmark index ended flat on Wednesday, the last trading day of the week saw the index add another 20 points to its weekly gain tally. Eventually, Nepse ended the week 27.91 points or 2.15% higher at 1,325.38 points.

Following correction in the last week, investors feared on the outlook of further slump in the market refraining from taking any notable long position. But the hesitation was soon cleared as buyers absorbed the selling pressure in another active trading week. Turnover crossed Rs 6 billion in the review period. This week's rally was driven mainly by insurance and microfinance scrips which have prolonged its gaining run for almost two months. Heavyweight banks also played part as banking stocks recovered their previous week's losses.

Class 'A' stocks also saw strength as the Sensitive Index rose 1.09%. On the sectoral front, huge gains came from Microfinance shares with the group's sub-index shooting up by 9.51%. Non-Life Insurance and Life Insurance segments followed suit with 8.48% and 4.77% advances. Hotels and Development Bank segments also witnessed significant buying pressure adding over 2% each. Banking and 'Others' sectors also closed the week marginally higher.

Meanwhile, Manufacturing & Processing and Trading segments suffered slight loss with the respective sub-indices losing around 0.6%. Hydropower, Finance and Mutual Fund sectors also edged lower.

Shares of Nepal Life Insurance Company Ltd were traded the most. More than Rs 334 million worth of the insurer's shares changed hands. Global IME Bank Ltd, similarly, posted turnover of Rs 294 million. Other Life Insurance stocks were also heavily traded. Surya Life Insurance Company Ltd, Prime Life Insurance Company Ltd and Gurans Life Insurance Company Ltd saw turnovers of Rs 217 million, Rs 180 million and Rs 177 million. Prabhu Bank Ltd, Asian Life Insurance Co Ltd and Deprosc Laghubitta Bittiya Sanstha Ltd were among other active scrips.

On the technical front, the Nepse index formed a bullish candlestick on the weekly time frame as the market erased its early losses to end the week firmly higher. Momentum indicators also suggest that the market is yet to lose its steam and hence some more upward movement can be expected in the coming week. But investors must also watch out for the market's movement at 1,350 point resistance to gauge the further possible direction of the equity market.

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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