Nepse hits 21-month high with record turnover

KATHMANDU, Feb 18: The Nepal Stock Exchange (Nepse) index saw considerable strength throughout Monday's trading session. After gaining roughly 24 points in early trading, the index saw a brief correction. However, the overall sentiment remained firmly bullish with the index making fresh highs in the afternoon. The index crossed 1,400-point level in the final trading hour but pulled back marginally to end the day 34.26 points higher at 1,398.24 points.

The remarkably upbeat trading on Monday saw the index notch it's best trading day in over a month as investors flocked to stocks of market heavyweight commercial banks. Following massive rallies seen in insurance and microfinance segments, which have brought the underlying scrips close to their multi-year highs, investors now look to shift focus toward commercial banks whose prices have remained largely subdued. Hence, commercial banks will continue to remain on focus in the coming sessions. Turnover also shot up to record level as more than Rs 2.69 billion worth of securities changed hands on the day.

All traded sectors ended the day in green following the broad rally. Trading sector continued to surge as the group's sub-index shot up by 5% on the day. Banking sector also saw major buying pressure as its sub-index surged by 3.58%. Following closely, sub-index of Hydropower sector jumped 3.16%. Non-Life Insurance sector ended the day 2.75% higher, while Development Bank, Finance and Life Insurance sub-indices added around 1.5% each. All other segments ended the day marginally higher.

Stocks of Shivam Cements Ltd were high in demand as reflected by turnover of Rs 130 million. Shikhar Insurance Company Ltd and Himalayan Distillery Ltd followed suit with transactions of Rs 112 million and Rs 103 million, respectively. Nepal Life Insurance Company Ltd and Neco Insurance Company Ltd, subsequently, logged turnover of roughly Rs 90 million each. NIC Asia Bank Ltd, Nepal insurance Company Ltd and NMB Bank Ltd's shares were also traded heavily on the day.

Hydropower stocks led the day's rally. Shares of Panchakanya Mai Hydropower Ltd and Ngadi Group Power Ltd hit the upper circuit of 10%. Both ordinary and promoter shares of Rastriya Beema Company Ltd also surged 10% each. Further, Arun Kabeli Power Ltd, Central Finance Co Ltd and Nabil Equity Fund registered advances of over 8% each. Himal Power Partner Ltd, Himalayan Bank Ltd and Standard Chartered Bank Ltd followed suit. Nepal Hydro Developers Ltd, on the other hand, saw its share price go down by 5.63%. Next, Nadep Laghubitta Bittiya Sanstha Ltd and Nerude Laghubitta Bikas Bank Ltd's shares also struggled with losses of over 3% each. Similarly, Ganapati Microfinance Bittiya Sanstha Ltd and Mero Microfinance Bittiya Sanstha Ltd saw their respective share prices fall by 2.74% and 2.59%, respectively. Prime Life Insurance Company Ltd, Mithila Laghubitta Bittiya Sanstha Ltd and Reliance Finance Ltd were among other top losing scrips.

As per ARKS technical analysis, the index stretched its gains after it broke out above 1,360-point mark, suggesting the market gathering further momentum. Strong bullish candlesticks accompanied by substantial market activity clearly indicate bulls dominating in the recent sessions. Both Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) hint some further upward movement. Nonetheless, psychological mark of 1,400 points can act as a major resistance where some correction can be expected. A breach of the corresponding level might see the index stretch its rally further.