Daily Market Commentary

Nepse extends sideways movement, hydro stocks rally

Published On: May 5, 2021 08:30 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 5: After opening 20 points higher in the morning, the Nepal Stock Exchange (Nepse) index fell below the opening level within first half hour of trading. The index climbed around 12 points at mid-day, but stocks erased gains to revert to the opening level for the second time in the afternoon. A minor dip in the final hour saw Nepse post a modest loss of 5.09 points to close Wednesday’s trading at 2,649.60.

The index has continued to see modest movements of late with most of the sectors consolidating after a sharp recovery from low of 2,500 mark. Despite the prohibitory actions in order and other economic activities coming to a screeching halt, the stock market has continued to see active market participation. With no other accessible investment option and minimal bank interest rates, stocks market has continued to see inflow of funds driving the overall demand of shares. Turnover of over Rs. 6 billion was recorded in Wednesday’s trading. 

Most of the sectors ended in negative territory. Hotels and Tourism, Manufacturing & Processing and ‘Others’ segments saw losses of over 1% each. Investment, Life Insurance, Banking, Development Bank, Mutual Fund and Microfinance sub-indices closed marginally lower. Hydropower stocks bucked the trend and rose 1.73% on average. Finance, Trading and Non-Life Insurance stocks also closed in positive territory. 

NIC Asia Laghubitta Bittiya Sanstha Ltd’s shares were heavily traded with a total turnover of over Rs. 223 million. Nepal Credit and Commerce Bank Ltd, Api Power Company Ltd and Janautthan Samudayic Laghubitta Bittiya Sanstha Ltd registered turnovers of Rs. 195 million, Rs. 183 million and RS. 152 million. Arun Kabeli Power Ltd, Nepal Infrastructure Bank Ltd and Grameen Bikas Laghubitta Bittiya Sanstha Ltd were the other actively traded stocks of the day.

Hydropower stocks continued to rally. Ridi Hydropower Development Company Ltd and Rairang Hydropower Development Company Ltd were the leaders with gains of exactly 10%. Further, Bishal Bazar Company Ltd, Mahila Laghubitta Bittiya Sanstha Ltd, Singati Hydro Energy Ltd, Chhyangdi Hydropower Ltd, Samata Gharelu Laghubitta Bittiya Sanstha Ltd, Union Hydropower Ltd and Joshi Hydropower Development Company Ltd also saw considerable strength with surge of over 9% each. 

On the other hand, mainly microfinance stocks saw correction on the back of profit booking. Asha Laghubitta Bittiya Sanstha Ltd, Laxmi Laghubitta Bittiya Sanstha Ltd and Sabaiko Laghubitta Bittiya Sanstha Ltd slumped over 3% each. Subsequently, United Modi Hydropower Ltd, National Microfinance Bittiya Sanstha Ltd, Grameen Bikas Laghubitta Bittiya Sanstha Ltd and Forward Community Microfinance Bittiya Sanstha Ltd dropped over 2% apiece.

On the technical front, the index formed a small bearish candlestick suggesting slight dominance of sellers in Wednesday’s trading. Nonetheless, the index is showing signs of consolidation above 2,600 mark as volatility has subsided notably. A volume backed surge can see the index breach 2,700 psychological level. In case of a correction, 2600 level will act as an immediate support. 

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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