Daily Market Commentary

Nepse plunges 70 points as rout intensifies

Published On: June 21, 2021 04:35 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, June 21: The local stock market opened in green but moved sharply lower within first few minutes of trading. A brief recovery pushed the Nepal Stock Exchange (Nepse) index in positive territory but the equity market failed to sustain its gains. Aggressive selling pressure was witnessed in the latter half of the session with the index closing slightly above its intra-day low at 2,834.41. The day’s loss stood at 71.06 points. 

The stock market has continued to witness extreme selling following Sebon’s cautionary press release. Investors have found no respite so far with the broad index shedding over 180 points in five days. Turnovers have also dipped firmly in the past couple of sessions. A below par Rs. 11.62 billion worth of securities changed hands on the day. 

Finance, Hydropower and Development Banks continued to tank remarkably with each sub-indices slumping around 5% each. Hotels & Tourism sector also struggled and dipped 4.51%. All other sectors saw notable selling pressure. Heavyweight Banks, meanwhile, dropped 1.78%. 

Shares of Nepal Reinsurance Company Ltd was the most heavily traded stock of the day. Over Rs. 1.3 billion worth of the reinsurer’s scrip changed hands. Hydroelectricity Investment & Development Company Ltd, next, registered a turnover of Rs. 311 million. Citizen Investment Trust and National Hydropower Company Ltd followed suit with turnovers of Rs. 296 million and Rs. 284 million. Himalayan Distillery Ltd, Nepal Infrastructure Bank Ltd and Api Power Company Ltd were among other actively traded shares. 

Narayani Development Bank Ltd and Hydropower Investment & Development Company Ltd bucked the trend and shot up by 9.97% and 4.33%. Nepal Telecom Ltd and Barun Hydropower Co. Ltd also closed the day in green. Beside, few mutual fund units ended in positive territory. 

Pokhara Finance Ltd and Universal Power Company Ltd suffered the most with both stocks tumbling more than 9%. Union Hydropower Ltd and Himal Dolakha Hydropower Company Ltd, similarly, lost 8.81% and 8.62%. Liberty Energy Company Ltd, Guheshwori Merchant Bank & Finance Co. Ltd, Progressive Finance Ltd and Panchakanya Mai Hydropower Ltd closed over 8% lower each. 

As per the ARKS technical analysis, the index formed a strong bearish candlestick dragging the index back to the support level at around 2,840. Momentum indicators reflect short term bearish movement. Nonetheless, with the index resting at support and close to 50 EMA line, a rebound is also likely in the coming sessions. A recovery with increase in volumes can suggest extension of the uptrend, while a breach of the current support and psychological 2,800 mark, will indicate possibility of a deeper 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)

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