Daily market commentary

Nepse retraces slightly after three-day surge

Published On: January 9, 2020 08:45 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Nepal Stock Exchange (Nepse) traded higher briefly in the morning session on Wednesday. However, the benchmark index soon pulled back dropping more than 9 points in the beginning hour. Nepse recouped its losses thereafter, but failed to hold ground in the afternoon. Sellers took over in the latter trading hours dragging the benchmark index 7.32 points lower to 1,209.60 points at the close.

After adding more than 50 points in a three-day rally, the major average retraced giving up some of its previous session's gains. Nonetheless, the index still trades notably higher compared to December 31st close at 1166.03 points signaling bulls still in control of the market. The drop in Nepse was also accompanied by a slight fall in market activity which indicates a minor correction rather than a possibility of a reversal. Total turnover stood at Rs 731 million on Wednesday.

Traded sectors witnessed mixed performance, but losses logged by the market heavyweight Banking sector pulled the market lower. Banking sub-index shed was down by 1.02%. Similarly, Non-life Insurance and Trading sub-indices posted losses of over 1% each. Hotels, Hydropower, Development Bank and Life Insurance sectors also ended in red. On the other hand, Finance sub-index climbed up by 1%. Closely following was Mutual Fund sub-index which rose by 0.9%. Microfinance, Manufacturing & Processing, and 'Others' sectors also eked out marginal gains.

Shares of Womi Microfinance Bittiya Sanstha Ltd were traded the most as the micro lender logged total turnover of Rs 72 million. Similarly, Rs 43 million worth of shares of NIC Asia Bank Ltd changed hands. Similarly, Machhapuchhre Bank Ltd, Deprosc Laghubitta Bittiya Sanstha Ltd and Prabhu Bank saw Rs 20 million worth of shares traded each.

Samata Microfinance Bittiya Sanstha Ltd bucked the trend as its share price rallied to hit the upper circuit of 10%.

Womi Microfinance Bittiya Sanstha Ltd and Reliance Finance Ltd also outperformed the market notably with respective gains of 9.48% and 8.93%. Reliance Finance Ltd announced 6.58% cash dividend for FY2018/19 on Wednesday. 

Share prices of Mountain Hydro Nepal Ltd and Swabhimaan Laghubitta Bittiya Sanstha Ltd also rallied by almost 8%. Other microfinance scrips followed suit.

In contrast, shares of Lumbini Bikas Bank Ltd fell the most as Wednesday was the ex-dividend date for the bank's shareholders. 

The scrip witnessed some selling pressure after its shareholders realized dividend for FY2018/19. It fell by 7.35%. Share price of Arun Kabeli Power Ltd tanked 4.20%, while those of Union Hydropower Ltd and National Microfinance Bittiya Sanstha Ltd fell by over 3% each. Sunrise Bank Ltd, Prabhu Bank Ltd and Taragaon Regency Hotel Ltd were among other top decliners.

ARKS technical analysis indicates the market forming a small bearish candlestick following Wednesday's correction. The index has managed to close above 1,200-point psychological mark which is a positive indication. Further, a bounce back from the respective range in the following sessions can provide an opportunity for investors to take long position with target at around 1,250 points.

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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