KATHMANDU: The local equity market saw some of its best trading session as Nepse experienced considerable upward movement throughout Sunday's session. The Nepal Stock Exchange (Nepse) index shot up by over 34 points, within the first 15 minutes of trading before correcting slightly within an hour. Nonetheless, buyers took heavy long positions after mid-day, pushing the index above 1,500 points in the afternoon. Eventually, the benchmark index ended the day up 69.56 points or 4.85% at 1,504.14 points.
The rally was mainly seen in commercial bank scrips while other sectors followed suit. The broad gains also helped the index notch its highest mark in over 2 years. In the past months, insurance, microfinance and other stocks saw notably upbeat movement while banking sector's pace was relatively subdued. However, with investors expecting the equity market to gather more momentum, Sunday's trading shows many market players shifting towards commercial banks, which are still trading close to its multi-year lowest level. This also helped the index mark a historical day with a record turnover of Rs 3.6 billion – a jump of 30% in the market activity against the day earlier.
Trading segment has continued to make further advances as the group's sub-index shot up by 8.25%. Heavyweight banks closely followed as the respective sub-index rallied 7.15%. Development Bank sector also posted a gain of 4.5%, while 'Others', Finance and Hydropower segments rose over 3% each. All other sectors ended the day firmly higher.
Shares of NMB Bank Ltd were traded the most with transactions totaling to over Rs 125 million. Next, Nepal Life Insurance Company Ltd posted a turnover of Rs 118 million followed by Shikhar Insurance Company Ltd and Himalayan Distillery Ltd which saw turnovers of Rs 103 million each. Grameen Bikas Laghubitta Bittiya Sanstha Ltd, Citizen Investment Trust, Prabhu Bank Ltd and NIC Asia Bank Ltd registered turnovers of more than Rs 90 million each.
Nine companies remained locked within the upper circuit limit of positive 10%. First Microfinance Laghubitta Bittiya Sanstha Ltd, NMB Bank Ltd, Swadeshi Laghubitta Bittiya Sanstha Ltd, Kalika Laghubitta Bittiya Sanstha Ltd and Mega Bank Ltd were among the best performers. RSDC Laghubitta Bittiya Sanstha Ltd, Everest Bank Ltd Convertible Preference Share, SBI Bank Ltd, and ICFC Finance Ltd followed suit.
Taragaon Regency Hotels Ltd and Barun Hydropower Co Ltd bucked the trend and slumped over 5% each. Hydropower stocks – Panchakanya Mai Hydropower Ltd and National Hydropower Company Ltd, subsequently, registered losses of 4% and 3.12%. Other major decliners include Oriental Hotels Ltd, Mahila Sahaytra Microfinance Bittiya Sanstha Ltd and Nerude Laghubitta Bikas Bank Ltd which closed over 2% lower each.
On the corporate front, Citizen Investment Trust declared 22% stock dividend to its shareholders from its earnings of Fiscal Year 2019/20. It had also distributed 22% bonus shares in the previous year.
On the ARKS technical front, a breakout from 1,400 points was followed by two large bullish candlesticks where the index collected over 100 points to reach the crucial psychological level at 1,500 points. This mark might act as a resistance for the short term. However, with the overall sentiment remaining bullish and market accelerating with momentum suggests more upward movement on cards. Sector wise, commercial bank segments saw a breakout of a crucial resistance and hence the rally in the heavyweight segment can further fuel the surge of the broader index. Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) also indicate strong uptrend in action. Some correction can be expected in the coming session after Sunday's massive gain. Traders can take the retracement as a buying opportunity in the secondary market with firm stop losses.
This column is produced by ARKS Capital Advisors Ltd
(Views expressed are those of the producer and do not necessarily reflect those of this publication)