daily market commentary

Nepse falters further, records losses for fifth consecutive day

May 25, 2018 08:09 AM Republica


KATHMANDU, May 25: The stock market opened on a positive note on Thursday but failed to hold gains as the Nepal Stock Exchange (Nepse) index started its decline after mid-day trading session. Subsequently, the index closed the last trading day of the week 0.76 percent lower at 1,318.22 points.

The continued downfall of the index throughout the week indicates that environment conducive for investors in the secondary market is yet to be seen. On the bright side, total turnover stood at Rs. 373 million, a rise of 26 percent compared to a day earlier.

Weakness was visible in most of the major sectoral indices. Microfinance Sub-Index snapped its four-day gaining streak and logged the highest decline of 1.9 percent. Similarly, Development Bank and Insurance sub-indices dropped over 0.9 percent each. Only, Trading and Manufacturing & Processing sub-indices ended the day higher.

In terms of market activity, shares of Kalika Microcredit Development Bank Ltd registered the highest turnover of over Rs 23 million. It was followed by shares of Nepal Bank Ltd with a turnover of Rs 20 million. Besides, Rs 12 million worth of shares of Prabhu Insurance Ltd was also traded on the day. 

Primarily, finance companies were the top gainers of the day. Shares of Jebils Finance Ltd advanced the most and was up 5.45 percent. Further, Janaki Finance Ltd climbed over 4 percent. Conversely, the list of top losers was dominated by microfinance companies. Shares of Kisan Microfinance Bittiya Sanstha Limited plunged over 5 percent. Among other losing stocks, Mirmire Microfinance Development Bank Ltd, Laxmi Laghubitta Bittiya Sanstha Ltd and Mero Microfinance Bittiya Sanstha Ltd saw their value go down by more than 4 percent each. 

Regarding major announcements, Lalitpur Finance Ltd is holding its 20th and 21st annual general meetings (AGMs) on June 17. According to the company, 100 percent rights issue is one of the main agendas for the meeting. Likewise, Prabhu Bank held its annual general meeting on Thursday. The bank has not announced any dividend to its shareholders for this year.

ARKS technical analysis model indicates that the market has continued its decline with the formation of an additional bearish candlestick in the last trading session of the week. The index is approaching its immediate support of 1,300-mark where its 50-day moving average also converges. Index movement around this level might point out a possible direction for the market. 

Moving Average Convergence/Divergence (MACD) has almost reached the neutral line after declining continuously for a month. Relative Strength Index (RSI) is also on its pursuit toward the oversold zone as a result of the recent selling pressure observed in the market. Hence, from the technical perspective, the market is likely to continue its short term down trend unless any significant event drives the market up.


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