Daily market commentary

Nepse sees further correction losing 13 points

Published On: December 17, 2019 09:33 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Dec 17: After witnessing a lack of direction in the morning, the Nepal Stock Exchange (Nepse) fell more than 9 points at mid-day on Monday. Following a failed rebound attempt in the afternoon, stocks slipped further pushing the benchmark index 13.75 points lower against Sunday's close. Consequently, Nepse ended Monday's trading session at 1,154.11 points.

After some indecision witnessed on Sunday, the equity index slipped further as traders continued to book profits mainly in insurance sector. The rally, in the meantime, seems to have lost its legs as investors remain slightly cynical over the prospect of a further sustained upward movement. 

The drop in the index was also accompanied by a slump in the turnover. The market witnessed transaction of Rs 408 million against Rs 686 million in the preceding session.

Non-Life Insurance sectors were the major laggards retracing 3.68 %, while its counterpart Life Insurance segment sank 2.42 %. Hydropower sub-index also fell 1.51 %. All these sectors had seen significant upward movement during Nepse's winning streak in the first half of December. Microfinance sub-index, Manufacturing & Processing and Trading sub-indices also pulled back 0.86 %, 0.79 % and 0.7 %, respectively. All other sub-indices closed the day lower. Heavyweight Banking sub-index shed 0.69 %.

NMB Bank Ltd led the list of active scrips on Monday. Over Rs 45 million worth of the bank's scrips changed hands. Next, Swabalamban Laghubitta Bittiya Sanstha Ltd logged in a turnover of over Rs 23 million. NIC Asia Bank Ltd saw a turnover of Rs 19 million, followed by Nepal Bank Ltd, Best Finance Co. Ltd Promoter Share and Nepal Life Insurance Company Ltd which posted transactions of at least Rs 12 million apiece.

Among gainers, Dibyashwori Hydropower Ltd and Union Hydropower Ltd saw considerable strength as both energy stocks rallied over 5 % each. Correspondingly, City Express Finance Co. Ltd jumped 4%. Samudayik Laghubitta Bittiya Sanstha Ltd, Laxmi Laghubitta Bittiya Sanstha Ltd and Arun Kabeli Power Ltd were among other gaining stocks which posted advances of over 2 % apiece.

On the other hand, Himal Power Partner Ltd suffered the most and tanked to hit the lower circuit of negative 10 %. Meanwhile, Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd and Rastriya Beema Company Ltd tumbled over 6 % each. Nepal Hydro Developers Ltd, Rastriya Beema Company Ltd Promoter Share and Mountain Hydro Nepal Ltd were among other major decliners. On the announcement front, United Modi Hydropower Ltd has notified Nepse regarding its Annual General Meeting (AGM). The meeting, which will be held on January 9, will endorse the agenda to distribute 8.42 % cash dividend among others.

On the technical front, with a formation of bearish candlestick the index has formed an evening star reversal signal suggesting bears overcoming bulls in the present context. Relative Strength Index (RSI) has also reverted downwards indicating market losing momentum. Hence, a possibility of further correction exists in the equity market. Nonetheless, some support is provided by 1,150 points level where the index's bounce can be expected. Else, its breach might see the index tumble further towards 1,120 points level.

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