Daily market commentary

Nepse falls 42 points on renewed pandemic fear

Published On: August 3, 2020 07:00 AM NPT

KATHMANDU, Aug 3: After seeing a month of upbeat trading as lockdown eased, the stock market made a significant recovery reaching as high as 1,560 points on intraday level in mid-July. Following some retracement from that point, the index accelerated losses on the first trading day of August as the rising coronavirus cases have stoked fear among investors. Hence, sellers remained in full control on Sunday’s trading.

The local bourse began trading firmly in red as the Nepal Stock Exchange (Nepse) index dropped 15 points within the first few minutes of trading. Even though stocks made a recovery attempt at mid-day, major selling pressure dragged the index lower. A relentless decline saw Nepse register a loss of 42.78 points at 1,396.28 points. Turnover stood at Rs 1.84 billion.

All sectors struggled on the day. Hotel stocks suffered the most and tumbled 4.49 percent. Non-Life Insurance and Banking sector also came under notable pressure as the respective sub-indices fell 3.52 percent and 3.35 percent. Life Insurance, Microfinance and Development Bank sub-groups were the other major losers with each dropping over 3 percent each. All other sectors ended Sunday’s trading in negative territory.

Among actives, Nepal Reinsurance Company Ltd registered the highest turnover of Rs 226 million. Next, shares of Nepal Life Insurance Company Ltd were also heavily traded with turnover of Rs 145 million. NMB Bank Ltd, Himalayan Distillery Ltd and NIC Asia Bank Ltd followed the suit with turnovers of Rs 84 million, Rs 73 million and Rs 70 million. Shikhar Insurance Company Ltd, Nabil Bank Ltd and Nepal Credit and Commerce Bank Ltd were among other top turnover stocks.

Few stocks bucked the trend and outperformed the market considerably. Arambha Chautari Laghubitta Bittiya Sanstha Ltd and Ajod Insurance Ltd remained locked in the upper circuit limit of positive 10 percent. Nepal Finance Ltd also rose 9.63 percent. The class ‘C’ financial institution has called for its Annual General Meeting for 8 fiscal years on August 27. Proposal to issue 175 percent right shares is the meeting’s key agenda among others. Chhyangdi Hydropower Ltd, Ankhu Khola Jalvidhyut Company Ltd and Himal Dolakha Hydropower Company Ltd, similarly, witnessed gains of 9.41 percent, 8.77 percent and 6.59 percent.

In contrast, shares of Joshi Hydropower Development Company Ltd tanked 9.72 percent after hitting positive circuit for 5 consecutive sessions. Further, Oriental Hotels Ltd, Himalaya Urja Bikas Company Ltd and Khani Khola Hydropower Company Ltd suffered declines of around 7 percent each. Taragaon Regency Hotels Ltd, RSDC Laghubitta Bittiya Sanstha Ltd and Samudayik Laghubitta Bittiya Sanstha Ltd were the other major losing scrips.

As per ARKS technical analysis, the index formed a bearish Marubozu candlestick on the daily timeframe reflecting sellers dominating the market in the current scenario. Besides, a breach of 1,400 – 1,415 points support also indicates possibility of further slump towards 1,350-point level which can act as a support where a rebound can provide some buying opportunity. On the other hand, failure to maintain 1,350 point mark will make way for further downward movement.

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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