Daily Market Commentary

Nepse inches higher; hydropower sector sees strength, microfinance stocks retrace

Published On: August 4, 2021 07:32 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, August 4: After opening firmly higher, the Nepal Stock Exchange (Nepse) index pulled back sharply but managed to trade in green in the morning. The benchmark witnessed lackluster trading thereafter, with the index hovering marginally in positive territory throughout Wednesday’s session. At the close, Nepse ended with a gain of 12.05 at 3,123.15.

The bourse continued to see some strength but momentum remains relatively subdued, with only few segments leading the advance. Turnover, however, rose sharply with over Rs. 15.59 billion worth of equities changing hands. So far, earnings results have been upbeat with microfinance companies reporting improved performance in the fiscal year 20/21 compared to the year earlier. Majority of heavyweight banks are yet to publish their Q4 results.

Sectors turned in mixed performance. Gains were led by hydropower sector, which saw a massive surge of almost 6%. Finance and Development Bank stocks also climbed more than 1% each. Manufacturing & Processing, Investment & Banking sub-indices also inched higher. On the other hand, microfinance segment witnessed a correction and fell more than 2% on average. Trading sub-index fell 1.44%, while ‘Others’ sector dipped 0.9%. All other sectors saw marginal losses.

Api Power Company Ltd was the most actively traded scrip of the day. Over Rs. 795 million worth of the energy stock changed hands. Arun Valley Hydropower Development Company Ltd and Sanima Mai Hydropower Ltd saw turnovers of Rs. 567 million and Rs. 503 million. Arun Kabeli Power Ltd, Chhimek Laghubitta Bikas Bank Ltd and Universal Power Company Ltd were among other actively traded stocks.

Energy stocks also dominated the list of major advances. Api Power Company Ltd, Khani Khola Hydropower Ltd, Dibyashwori hydropower Ltd, Kalika Power Company Ltd, Upper Tamakoshi Hydropower Ltd, Ghalemdi Hydro Ltd and Union Life Insurance Company Ltd hit the upper circuit limit of positive 10%. Mainly other hydropower and finance stocks saw strength.

On the other hand, Ngadi Group Power Ltd tanked 5.38%, followed by Pokhara Finance Ltd, which fell 4.51%. Vijaya Laghubitta Bittiya Sanstha Ltd, Nerude Laghubitta Bikas Bank Ltd, Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd and Sadhana Laghubitta Bittiya Sanstha Ltd also saw losses of over 4% each. Other microfinance stocks followed suit.

As per the ARKS technical analysis, the index formed a small spinning top candlestick on the daily timeframe suggesting extension of indecision. Turnover, however, jumped sharply suggesting that both buyers and sellers were active in the day. Given the index holds ground above 3,100 mark, the market will likely extend the upward move. On the other hand, a breach of 3,100 support can see the index make a minor correction.

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)

Leave A Comment