Weekly market commentary

Nepse posts weekly loss in spite of mid-week recovery

Published On: August 3, 2019 08:14 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Aug 3: Weakness from previous week carried over to Sunday's trading as the Nepal Stock Exchange (Nepse) index tumbled more than 17 points in the session. Nonetheless, stocks clawed back some of the losses in the latter sessions. 

The benchmark index climbed over 3% in each of Monday and Tuesday's sessions. Similarly, the index stretched more than 6 points on Wednesday. 

Despite opening on a positive note on Thursday, the index succumbed to selling pressure in the afternoon to close the day with a modest 1.73 points loss. Consequently, the index ended the week 6.08 points or 0.48% lower at 1,263.85 points.

The index has failed to find any substantial foothold after the monetary policy announcement towards the end of July. 

Hence, the bourse has dropped for two consecutive weeks, albeit with lower volumes. 
Nonetheless, the earnings outlook has remained upbeat so far as banks and financial institutions (BFIs) continue to report remarkable financial performance in the fourth quarter. 

Most of the company's earnings have shot up considerably against those in the previous fiscal year. In the meantime, turnover has remained modest. Total weekly turnover stood at just over Rs 2 billion.

With the drop in the broad index, Sensitive Index, which gauges performance of Class 'A' stocks, also fell 0.34%. 

On the sectoral front, most of the traded sectors closed the week lower. Banking, Life Insurance and Trading scrips were the major laggards as the respective sub-indices sank over 1% each. 
Similarly, Manufacturing & Processing, Hydropower and 'Others' sub-indices fell 0.73%, 0.66% and 0. 64%, respectively. Three segments ended the review period in green. 

Microfinance sector saw significant strength buoyed by outstanding performance reported by most of the companies in the segment. The group's sub-index soared 5.26%. Mutual Fund and Finance sub-indices followed with gains of 1.92% and 1%, respectively. 

In terms of market activity, Nepal Bank Ltd was the most actively traded scrip of the week followed by Agriculture Development Bank Ltd. Both commercial banks saw turnovers of over Rs 100 million. Next, Prabhu Bank Ltd logged in a total transaction of Rs 89 million. 

Neco Insurance Co Ltd Promoter Share, Shivam Cements Ltd and United Insurance Co Ltd were among other active stocks of the week. On Friday, Nepal Bank Ltd published its fourth quarter financials. The government-owned bank has reported a fall in its net profit to Rs 2,611 million from Rs 3,215 million in the previous fiscal year. The decline came on the back of drop in its net interest income. 

Among others, Forward Community Microfinance Bittiya Sanstha Ltd also published its earnings report. The micro-sector lender's net profit has grown 15% year-on-year to Rs 310 million. 

As per the ARKS technical analysis, the market formed a small bearish candlestick on the weekly timeframe. After losses seen in two consecutive weeks, the sentiment in the market seems slightly bearish. 

However, no significant momentum is visible behind the index's movement as volume has remained subdued. Only a breach of 1,240 points support might signal further downfall. In the meantime, the resistance of the market lies at around 1,280 points.

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