KATHMANDU, June 21: The Nepal Stock Exchange (Nepse) opened this week’s trading on a significantly weak note. The equity market’s benchmark Nepse index opened slightly higher but gave up early gains as all stocks faced notable selling pressure. The index fell around 30 points by mid-day and gave further ground towards the closing hours. At the end of Sunday’s session, Nepse finished at 2,905.32 – down 63.11 points against the session earlier.
The stock market continued to tank following Sebon’s press release last week listing 51 overvalued companies as per the regulator’s analysis. Sebon cautioned investors to refrain from speculative trading while also vowing to investigate malpractices in the equity market. However, the press release made a deep dent in investor’s confidence, with almost all of the listed stocks plunging sharply thereafter. The market lost over 100 points in three straight days. Turnover also fell sharply relative to prior week’s average. Only Rs. 11.82 billion worth of the shares changed hands.
Hydropower, Development Bank and Finance sectors came under significant pressure after leading Nepse’s advance throughout the month of May and first half of June. All three sub-indices closed over 3% lower. Trading and Manufacturing & Processing sub-indices also tumbled 2.4% each. All other sectors closed the day firmly in red. Relatively stable Banking and Mutual Fund sectors fell the least.
Shares of Nepal Reinsurance Company Ltd were heavily traded with turnovers of Rs. 810 million. Nepal Insurance Company Ltd and National Hydropower Company Ltd followed suit and registered turnovers of Rs. 430 million and Rs. 337 million. NLG Insurance Company Ltd, Himalayan Distillery Ltd, Lumbini Bikas Bank Ltd and Nepal Infrastructure Bank Ltd were among other actively traded scrips.
Only few stocks made it to the gainers’ list. Gurkhas Finance Ltd bucked the trend and closed more than 5% higher. National Hydropower Company Ltd and Ru Ru Jalbidhyut Pariyojana Ltd also jumped more than 3%. Taragaon Regency Hotel Ltd and Narayani Development Bank Ltd also ended in green.
Union Hydropower Ltd were the biggest losing stock of the day. The scrip’s price fell to hit the lower circuit of negative 10%. Shree Investment & Finance Co. Ltd, Barun Hydropower Co. Ltd and Nepal Hydro Developers Ltd tumbled more than 8%. Khani Khola Hydropower Company Ltd, Ghalemdi Hydro Ltd, CEDB Hydropower Development Company Ltd and Ngadi Group Power Ltd were among other major decliners.
As per the ARKS technical analysis, the index formed a large bearish candlestick suggesting sellers’ dominance in the session. Besides, a breach of 2,950 mark also suggests short term weakness in the stock market. Currently, the market rests at psychological 00’s mark, where the index’s movement will be crucial in determining the possible move. A rebound with volume can suggest continuation of the short term uptrend, while a breach of the 2,900 level to the downside can see the index test 2,840 support level.
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)