Daily market commentary

Nepse rallies 20 points after Thursday’s correction

Published On: February 17, 2020 09:56 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Stocks witnessed slight gain in the initial trading hour on Sunday. The benchmark Nepal Stock Exchange (Nepse) index plateaued at mid-day before posting a steady advance in the latter trading hours. The Nepse index ended Sunday's trading on a firmly bullish note with a gain of 19.39 points at 1,363.97 points.

The index notched its fresh 21-month high after Sunday's rally. The momentum has shown no signs of slowing down despite the index accumulating over 250 points over the past two and half months. The index also seems to have broken from its consolidation zone with insurance sector leading the charge. Overall, upbeat trading has prevailed. Further, the recent gains in the secondary market were also backed by notable market activity which indicates that the rally is yet to lose its steam. Almost Rs 2 billion worth of securities were traded in the bourse on Sunday.

Barring few sectors, all traded groups closed the day higher. Maximum gains came from Non-life Insurance stocks as all of the component scrips saw major strength. The group's sub-index was up by 6.72%. Similarly, Life Insurance sub-index also logged gains of 5.22%. Microfinance and Manufacturing & Processing stocks followed suit with advances of over 2% each. Trading sub-group, meanwhile, added over 1%. Market heavyweight Banking sector's sub-index rose 0.45%. Mutual Fund, Finance and 'Others' segments, however, saw marginal dips.

Shares of Himalayan Distillery Ltd were traded the most with a turnover of over Rs 180 million. Cement manufacturer Shivam Cements Ltd's shares closely followed with Rs 130 million worth of shares traded Similarly, insurance stocks were traded actively in the market. Nepal Life Insurance Company Ltd logged turnover of Rs 94 million, while Surya Life Insurance Company Ltd and Shikhar Insurance Co Ltd posted turnovers of Rs 67 million each. Nepal Insurance Company Ltd, Neco Insurance Company Ltd, National Life Insurance Company Ltd and Asian Life Insurance Company Ltd were among other active stocks of the day.

Share prices of five companies, led by Radhi Bidyut Company Ltd, were close to hitting the upper circuit of 10%. The energy stock added 9.49% on its price. Similarly, share prices of NLG Insurance Company Ltd, Ngadi Group Power Ltd, Nepal Hydro Developers Ltd and Rastriya Beema Company rose over 9% each. Shikhar Insurance Company Ltd, Sagarmatha Insurance Co. Ltd and Infinity Laghubitta Bittiya Sanstha saw their share prices go up by 7% each.

In contrast, unit value of Nabil Balance Fund-II fell by 6.67%. Finance scrips struggled as Central Finance Co Ltd, Janaki Finance Ltd and Guheshwari Merchant Bank & Finance Co Ltd saw their share prices go down by 5.88%, 5.03% and 3.57%, respectively. Other losing securities include Nabil Equity Fund, Multipurpose Finance Co Ltd, Green Development Bank Ltd and Hydroelectricity Investment and Development Company Ltd.

On corporate front, Shikhar Insurance Company Ltd has announced February 25 as its book closure date for 30% rights issue. Investors holding the insurer's share till February 24 will be eligible to apply for the right shares.

According to ARKS analysis, the benchmark index formed a strong bullish candlestick with the market closing at its intra-day high mark. With the day's gain, the index has breached its resistance zone of 1,350-1,360 points with substantial market activity. Hence, given the market maintains its ground above this level in the coming sessions, the respective level will act as a crucial support for the market on future course. In the meantime, technical indicators also show the market gaining momentum which suggests possibility of further upward movement. Psychological mark of 1,400 points can act as the next resistance for the index.


This column is produced by ARKS Capital Advisors Ltd
(Views expressed are those of the producer and do not necessarily reflect those of this publication)

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