Daily Market Commentary

Nepse extends sell-off to close below key 3,000 mark

Published On: August 31, 2021 08:00 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, August 31: The Nepal Stock Exchange (Nepse) index remained under pressure throughout Tuesday’s trading hours. After dipping more than 30 points in the morning, the index recovered slightly. However, the index continued to falter in the latter trading hours. At the close, the benchmark was down 69.05 points to end at 2,975.84.

With the day’s plunge, the index gave up gains of more than 20 days in just six trading days. Restrictions on margin lending to upto Rs. 12 crore for an individual, has had a notable impact in the secondary market of late, with major investors forced to sell their holdings to comply with the NRB directive. Hence, the market is yet to find a footing with further volatility expected in the coming sessions. Market participation was moderate with Rs. 13.26 billion worth of securities changing hands.

All sectors tanked on the day led by Development Bank, Hydropower, Finance and ‘Others’ sub-groups. The respective scrips fell more than 3% each. Similarly, most of the remaining sectors dipped 2%. Heavyweight Banking group suffered a 1.15% decline.

Arun Valley Hydropower Development Company Ltd and Himalayan Distillery Ltd were the most actively traded scrips. While the former saw a turnover of over Rs. 1 billion, the latter logged in a transaction of almost Rs. 500 million. Api Power Company Ltd, Nepal Bank Ltd and Goodwill Finance Company Ltd followed suit with turnovers of around Rs. 30 million each.

Karnali Development Bank Ltd, Manakamana Smart Laghubitta Bittiya Sanstha Ltd, Support Microfinance Bittiya Sanstha Ltd and Corporate Development Bank Ltd were the day’s major winners with respective gains of 7.58%, 6.08%, 5.96% and 4.63%. Besides few mutual fund units and debentures ended the day in green.

On the other hand, 172 stocks closed in red with Ru Ru Jalbudhyut Priyojana Ltd hitting the lower circuit mark of negative 10%. Mountain Hydro Nepal Ltd, Himalaya Urja Bikas Company Ltd and Civil Laghubitta Bittiya Sanstha Ltd lost around 7% apiece. Ghalemdi Hydro Ltd sank 5.94%, Mountain Energy Nepal Ltd dipped 5.75% and Ridi Hydropower Development Company Ltd dropped 5.65%.

As per the ARKS technical analysis, the index formed a strong bearish candlestick suggesting sellers dominating Tuesday’s trading. An extension of the dip below 3,000 mark signals a breach of the support. The index failing to revert back above 3,000 mark can suggest further minor corrections. On the other hand, a rebound with volume can see the index resume its medium term uptrend.

This column is produced by ARKS Capital Advisors Ltd.

(Views expressed in the article are those of the producer and do not necessarily reflect those of this publication)

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