Daily market commentary

Nepse inches lower for second straight session

Published On: November 14, 2019 09:52 AM NPT

Local stocks came under some pressure in the morning on Wednesday and fell marginally in the initial trading hour. After dropping to 1,135 points at noon, the Nepal Stock Exchange (Nepse) index plateaued to close the day at 1,135.16 points with a loss of 4.80 points compared to Tuesday's close.

The consecutive drops can be taken as correction following relatively large advance that came on Monday. Nonetheless, the current movement also suggests that the market is failing to make a sustained rally as indecision continues to affect the equity market. The market has been in a sideways trend for almost 2 months now with both buyers and sellers negating each other. Investors also seem reluctant to take major positions with another low volume trading session recorded on Wednesday. Rs. 275 million worth of securities were traded.

Most of the sectors fell mirroring the broader market. Mutual Fund sub-index suffered and shed 1.22 %. Manufacturing & Processing and Life Insurance stocks also saw some pressure with the respective sub-indices dropping 0.84 % and 0.81 %. Banking, Hydropower, Hotels Development Bank and Non-Life Insurance segments posted modest moves to the downside. In contrast, Trading group jumped 5.09 % as Salt Trading Corporation continued to rally. Finance and 'Others' sectors inched marginally higher.

NMB Bank Ltd continued to trade actively following its dividend announcement. The bank's scrip saw a total transaction of over Rs 31 million on the day. Machhapuchhre Bank Ltd and Salt Trading Corporation's shares followed suit with turnovers of at least Rs 20 million each. Nepal Investment Bank Ltd and Nepal Bank Ltd, subsequently, logged in turnovers of Rs 18 million and Rs 15 million.

Biggest gains came from Salt Trading Corporation as its share price shot up by almost 8 %. Microfinance stocks followed as Sabaiko Laghubitta Bittiya Sanstha Ltd, Adhikhola Laghubitta Bittiya Sanstha Ltd and Mithila Laghubitta Bittiya Sanstha Ltd posted gains of 6.46 %, 5.71 % and 5.18 %, respectively. Mountain Hydro Nepal Ltd, Universal Power Company Ltd and Gurkhas Finance Ltd were among other top advances.

On the other hand, Nepal Insurance Company Ltd's shares tanked the most on Wednesday. The scrip's price fell 5.51 %. Nepal Investment Bank Ltd also dropped 4.35 % after the commercial bank announced 19 % dividend including 10.5 % bonus shares and 8.5 % cash payout for the year 2018/19. The bank had distributed 18 % bonus shares and 22 % cash dividend in the previous fiscal year. Further, Support Microfinance Bittiya Sanstha Ltd, Swadeshi Laghubitta Bittiya Sanstha Ltd and Prime Life Insurance Company saw declines of over 3 % each.

Kamana Sewa Bikas Bank Ltd also announced its dividend for the year 2018/19. As per its notice to Nepse, the class 'B' financial institution will be endorsing 6.8 % cash dividend to its shareholders after approval from its upcoming Annual General Meeting (AGM). The scrip edged marginally lower on Wednesday.

On the ARKS technical front, the market continued its correction after Monday's gain with a bearish candlestick formation on the daily timeframe. Further range bound trading is witnessed with the market showing no clear direction. The consolidation phase has stretched amid very low volatility experienced in the equity market of late. Investors should, hence, look for a breakout outside 1,120 to 1,150 points zone, which might point out the plausiblecourse of the Nepse index.

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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