weekly market commentary

Nepse posts weekly gains as investors shift focus to earnings

August 18, 2018 07:48 AM Republica


KATHMANDU, Aug 18: Losses from last week carried over to the initial trading session as the Nepal Stock Index (Nepse) index shed more than 16 points on Sunday. However, the index staged a partial recovery on Monday as it recouped 10 points on the day. Subsequently, the index advanced in all the latter sessions of the week. At the close, Nepse posted a weekly gain of 29.69 points or 2.51 percent to close at 1,210.32 points.

Nepse index which lost more than 10 points in the previous week, erased all of its losses to close firmly higher this week on the heels of upbeat earning reports published by commercial banks. Further, the index was also buoyed by earnings presented by other sectors companies. A string of notable companies, including Nabil Bank Ltd, Nepali Investment Bank Ltd, Standard Chartered Bank Ltd, and Agriculture Development Bank Ltd, reported remarkable fourth-quarter earnings report in the review period. Investor participation, which has remained in one of its lowest levels recently, also showed a significant improvement as the total weekly turnover increased to Rs. 1.43 billion – up 56 percent compared to the previous week. 

Sensitive Index which gauges the performance of Class 'A' stocks also mirrored the broader market and added 2.51 percent. On the sectoral front, heavyweight banks were some of the biggest contributors to the broad surge. Banking sub-index jumped more than 3 percent this week. Similarly, Development Bank and Non-Life Insurance stocks also added over 3 percent each. Besides, all other sub-indices ended the week higher. 

Nepal Life Insurance Company Ltd led the list of actives as more than Rs. 78 million worth of its shares changed hands. This week, the insurer notified Nepse regarding conversion of 10 percent of its promoter shares to public category. Additionally, banking stocks remained as the go-to stock among investors as reflected by the market activity. More than 49 million worth of Nabil Bank Ltd's scrips were traded. The bank has reported a net profit of Rs. 4 billion in the fourth quarter of FY2017/18 – the highest among other listed commercial banks. Other top turnover stocks for the week include, Prime Commercial Bank Ltd, Nepal Investment Bank Ltd and Nabil Bank Ltd Promoter Share. 

On the announcements front, some of the micro sector lenders have begun declaring dividends from the profit of FY2017/18. Mero Microfinance Bittiya Sanstha Ltd has decided to distribute 15 percent bonus shares along with 11.32 percent cash dividend. Further, Swarojgar Laghubitta Bittiya Sanstha Ltd and Global IME Laghubitta Bittiya Sanstha Ltd has declared 20 percent and 15 percent bonus shares to their respective shareholders. Meanwhile, Womi Microfinance Bittiya Sanstha has announced 25 percent cash dividend. Pokhara Finance Ltd is also distributing 5 percent bonus shares and 8.684 percent cash dividend to its shareholders. The decision is due to be approved in its annual general meeting (AGM).

ARKS technical analysis model indicates the index breaching the resistance of 1,200 points mark this week. The rally is also supported by increased market volume witnessed towards the end of the review period. Further, Moving Average Convergence/ Divergence (MACD) has formed a golden cross which indicates that the momentum is favoring the bulls at present. Hence, if the index manages to hold above 1,200 points with sustained improvement in market activity, a shift in the trend for the short term can be expected. 


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