Daily market commentary

Nepse pulls back giving up Monday's gains

Published On: November 13, 2019 10:16 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Stocks traded flat initially but quickly shed value as investors resorted to selling in the afternoon. The Nepal Stock Exchange (Nepse) index fell to 1,140 points by mid-session and traded flat thereafter. Eventually, the benchmark index closed 5.61 points lower at 1,139.96 points on Tuesday.

The broad rally on Monday was superseded by some sell-off which saw the index partially erase its gains. Consequently, the bourse failed to stretch its advance, reverting back to its consolidation zone. This shows that indecision continues to prevail in the secondary market. A drop in total turnover was also witnessed as only Rs 380 million worth of securities were traded on Tuesday compared to Rs 550 million a day earlier.

Most of the sectors, barring Manufacturing & Processing segment, closed the day lower. Non-Life Insurance scrips were the major laggards tumbling as the group's sub-index fell by 1.33%. Development Bank sector also struggled and was down by 0.84%. Microfinance, Hotels and Hydropower sub-indices fell around 0.7% each. All other sectors saw modest losses. Market bellwether banks also suffered with Banking sub-index edging 0.51% lower.

Himalayan Distillery Ltd led the list of active scrips as almost Rs 70 million worth of the beverage maker's shares changed hands on the day. Shares of NMB Bank Ltd were also actively traded as reflected by a turnover of over Rs 64 million. Shares of Chilime Hydropower Company Ltd worth Rs 25 million changed hands on the day. Further, Nabil Bank Ltd, Kumari Bank Ltd Promoter Share and Prabhu Bank Ltd posted turnovers of Rs 16 million, Rs 12 million and Rs 10 million, respectively.

Among advances, Himalayan Distillery Ltd extended its rally for second straight day adding 7.54% on its share price. Ghodighoda Laghubitta Bittiya Sanstha Ltd and Sabaiko Laghubitta Bittiya Sanstha Ltd followed suit with gains of over 5% each on their share prices. Nepal Investment Bank Ltd also added 3.15% on its share price, while share price of Universal Power Company Ltd was up by 2.63%.

On the other hand, shares of Joshi Hydropower Development Company Ltd and Swabhimaan Laghubitta Bittiya Sanstha Ltd came under significant pressure as reflected by a price drop of almost 5%. Microfinance stocks followed suit as Naya Nepal Laghubitta Bikas Bank Ltd and Vijaya Laghubitta Bittiya Sanstha Ltd saw their share prices go down by over 4% each. IME General Insurance Ltd, Arun Valley Hydropower Development Company Ltd and Synergy Power Development Ltd were among other major losers of the day.On corporate earnings front, Prime Commercial Bank Ltd has reported a 13 % growth in its net profit. Its first quarter net profit stands at Rs 660 million up from Rs 582 million in the corresponding quarter of the previous year. Similarly, first quarter net profit of Laxmi Bank Ltd shot up by 32.65% year-on-year. Its profit after tax stands at Rs 402 million.

ARKS technical analysis indicates formation of a small bearish candlestick on the daily timeframe as the index retraced into the consolidation territory. Resistance of 1,150 points, hence, has still held ground with further sideways movement on the cards. Technical indicators also suggest lack of any significant momentum in the bourse. Hence, investors should approach the market with caution unless a volume-backed breakout from 1,120 to 1,150 points range is witnessed.

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