Daily Market Commentary

Nepse logs 22 points weekly loss amid interest rate woes

Published On: February 9, 2019 10:01 AM NPT By: Republica

KATHMANDU:  The Nepal Stock Exchange (Nepse) index struggled throughout the week as the benchmark index closed in the red on four out of five trading days. 

Sunday and Monday saw losses of over 8 percent each. The market took a breather mid-week as the index recouped around 3 percent on Tuesday. The selling pressure, nonetheless, persisted in the latter trading days as Wednesday was marked by a loss of over 7 points. The market ended essentially unchanged on Thursday. 

Eventually the bourse closed the week at 1,139.57 points – down 22.06 points or 1.90 percent against the prior week. 

Investors have shown marked skepticism with a sustained sell off in the exchange since the start of 2019. Following the week's decline, all the gains that came in December have evaporated and the index is now on the verge of hitting its 3-year low at around 1,120 points mark. The bearish sentiment also remains fueled by the interest rate concerns, which is far from being subdued in the short run. Amidst the bearish sentiment, traded volumes are also running on the lower side of the spectrum. Over Rs 1,504 million worth of shares changed hands in the review period. 

Class 'A' stocks also came under pressure as the Sensitive Index dropped 1.70 percent in the week. Similarly, weakness was apparent in all of the traded sectors. 

Hydropower stocks dropped sharply as the group's sub-index hacked 3.99 percent, pulled mainly by the shares of Upper Tamakoshi Hydropower Ltd. Sub-index of Life Insurance scrips also took a knock and tumbled 3.13 percent followed by that of 'Others' segment which sank 3.12 percent. 

Next, Manufacturing & Processing and Non-Life Insurance sub-indices fell 2.64 percent and 1.69 percent, respectively. Banking sub-index, meanwhile, lost 1.31 percent. 

In terms of market activity, shares of Upper Tamakoshi Hydropower Ltd registered the highest turnover of Rs. 104 million. Nepal Bank Ltd and Nepal Telecom Company Ltd followed suit with turnovers of Rs 66 million and Rs 61 million, respectively. Machhapuchhre Bank Ltd, Citizen Investment Trust and Nabil Bank Ltd Promoter Share were among other active stocks in the week. 

In the corporate space, Century Commercial Bank Ltd published its second quarterly report on Friday. The bank's net profit grew by over 40 percent year-on-year to Rs 518 million. 

The growth came on the back of a substantial improvement in its net interest income. Similarly, Mithila Laghubitta Bittiya Sanstha Ltd reported a 45 percent net profit growth in its second quarter. Its earnings stand at Rs 7.13 million against 4.89 million in the corresponding quarter last year. In other news, Asha Laghubitta Bittiya Sanstha Ltd floated 674,000 units Initial Public Offering (IPO) shares this week. Following the issue, the microfinance's capital will cross Rs 200 million.

The equity index, as per the ARKS weekly technical analysis, has formed bearish candlesticks for three weeks in a row suggesting a sustained bearish pressure. The index also trends firmly below 20 and 50 day Exponential Moving Averages (EMAs) which further reaffirms the downtrend. Nonetheless, the market may find support at 1,120 points which is also a multi-year low mark. However, another downfall breaching the level can see the index tumble further to 1,100 points zone. 

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)

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