Daily Commentary

Nepse hits fresh post-lockdown closing high as energy stocks surge

Published On: September 3, 2020 09:46 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 2: Stocks began Wednesday’s session on a highly upbeat note, as the Nepal Stock Exchange (Nepse) index rallied 30 points to 1,515 in the first half an hour of trading. A correction followed bringing the index back towards the 1,500 points level at mid-day. However, stocks continued to gain strength in the afternoon as the market rose to 1,520 point’s level. A slight dip at the end saw the benchmark close at 1,510.57 – up 25.58 points against prior close.

The equity market has been gaining a lot of traction off late with turnovers making fresh highs in consecutive sessions. While the lockdown is in place, brokerage firms have seen a major rise in the registered number of investors, as many businesses and services have remained closed. Fresh funds have continued to flow into the exchange, which has been the major driving force for the stock market in the past couple of weeks. Daily turnover crossed Rs. 4 billion for the first time since early March.

With almost all of the stocks constituting the hydropower sub-index shooting up by almost 10 %, the sub-group as a whole rallied 9.30 %. Investors eyeing hydropower stocks, which has been in a constant downtrend since 2016 high, has caused the stocks to shoot up in the past couple of sessions. ‘Others’ index also jumped 3.93 % as Nepal Reinsurance Company Ltd stretched its rally. Trading and Banking sub-indices followed suit with gains of 1.77 % and 1.62 %. Development Bank and Finance sectors also moved in tandem with heavyweight banks and closed 1 % higher each. All other sectors ended the day in green, while the Non-Life Insurance segment witnessed a correction of 1.67 % after its relentless rally since early August. Life Insurance sector inched marginally lower.

In terms of market actives, Nepal Reinsurance Company Ltd alone accounted for over 15 % of the day’s total turnover. Over Rs. 674 million worth of its shares changed hands. Shikhar Insurance Company Ltd and National Life Insurance Company Ltd were also actively traded with turnovers of Rs. 177 million and Rs. 165 million. Nepal Life Insurance Company Ltd, Neco Insurance Company Ltd, Life Insurance Corporation Nepal and NIC Asia Bank Ltd were among other top turnover scrips.

Hydropwoer stocks dominated the list of major gainers. Arun Valley Hydropower Development Co. Ltd, Api Power Company Ltd, Panchthar Power Company Ltd, Ridi Hydropower Development Company Ltd, Union Hydropower Ltd, Radhi Bidyut Company Ltd, Ngadi Group Power Ltd and Joshi Hydropower Development Company Ltd shot up by exactly 10 % on the day. Besides other energy stocks also saw considerable strength and registered gains of over 9 % each.

On the other hand, mainly insurance stocks came under pressure on profit booking. Prabhu Insurance Company Ltd led the losses with a 4.41 % dip, closely followed by Prudential Insurance Company Ltd, which fell 4.01 %. Multipurpose Finance Ltd fell 3.70 %. Further, Shikhar Insurance Company Ltd, Surya Life Insurance Company Ltd and Lumbini General Insurance Co. Ltd also struggled posting declines of over 3 % each. Other insurance stocks followed suit.

As per ARKS technical analysis, the index marked a third straight bullish candlestick on the daily timeframe reflecting notable optimism. Traded volumes also remained close to record levels, which indicates the current uptrend gaining momentum. Further, a close above 1,500 psychological markreflects bulls in control in the current juncture. Meanwhile, Relative Strength Index (RSI) has climbed close to overbought territory making some correction likely in the coming sessions. Nonetheless, the index maintaining ground above the 1,450-1,460 points mark will keep the current short-term uptrend intact.

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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