Weekly Market Commentary

Nepse extends losses to sixth straight week

Published On: August 31, 2019 01:25 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Semained under pressure throughout the last trading week of August. The benchmark Nepal Stock Exchange (Nepse) index witnessed a loss of 3.44 points on Sunday followed by a decline of 6.49 points on Monday. Though the index recouped some of its losses mid-week as Tuesday saw a gain of 4.87 points, weakness persisted in the latter trading days with the index giving up a combined 11 points on Wednesday and Thursday. Consequently, the Nepse ended the month's last trading week with a loss of 16.65 points, or 1.37%, compared to the previous week. Nepse ended at 1,196.41 points, below the psychological 1,200-point mark, for the first time since mid-April.

With this, the bourse has dropped value for six consecutive weeks -- the longest weekly run since July 2018. Though most of the banks and financial institutions (BFIs) reported remarkable growth in earnings in the last fiscal year, other sectors failed to improve their financial performance which took a toll on the overall market. Mainly Hydropower and Insurance sectors continued to remain under pressure contributing to the persistent slump in the broader index. However, dividend outlook has remained upbeat so far with a few commercial banks already declaring higher dividends compared to the previous fiscal year. Other banks are also expected to follow suit.

Market participation also remained firmly subdued this week with only Rs 1,625 million worth of shares traded in the review period. Sensitive index, that measures the performance of Class 'A' stocks, also moved in tandem with the broader market, going down by 0.93 %. In terms of sectoral movements, maximum losses came from Life Insurance, Hydropower and Non-Life Insurance segments. Their respective sub-indices were down by 3.7%, 3.19% and 2.53%. Manufacturing & Processing, 'Others', Mutual Fund and Hotels sub-indices saw decline of over 1% each. Meanwhile, the heavyweight Banking sector's sub-index was down by 0.91 %. All other sub-indices, barring Trading sub-index, closed the week lower.

In terms of stock-wise turnover, promoter shares of RMDC Microfinance Bittiya Sanstha Ltd and Prabhu Bank Ltd led the list of active stocks. Both stocks saw turnovers of over Rs 100 million each. NIC Asia Bank Ltd logged transaction worth over Rs 97 million this week. The commercial bank announced 10% stock dividend and 11% cash dividend to its shareholders earlier week. Next, shares of Nepal Bank Ltd worth over Rs 72 million were traded in the week. Stocks of Kumari Bank Ltd were also traded actively in the bourse after the commercial bank announced 10% bonus shares from its earnings of the previous fiscal year.

As per the ARKS technical analysis, the index formed a bearish candlestick on the weekly timeframe stretching losses for six straight weeks. Consequently, weekly technical indicators have also slumped significantly, suggesting that bears are still in significant control. Given the market fails to cross the psychological 1,200-point mark in the coming week, further downward movement can be expected. The local bourse's immediate support lies at 1,180-point mark.

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