Weekly market commentary

Nepse shoots up 47 points in week's broad rally

Published On: January 11, 2020 08:58 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: The benchmark index saw considerable strength since the beginning of the week. After rallying more than 16 points on Sunday, the Nepal Stock Exchange (Nepse) index stretched its gaining streak till mid-week. While Monday saw the major average add over 18 points, Tuesday was marked by another 16 points surge. The index retraced roughly 7 points on Wednesday amid profit booking by traders but recouped some of the losses on Thursday with over 3 points advance. Overall, Nepse index closed the week notably higher at 1,213.11 points – up 46.9 points or 4.02% compared to prior week.

The gains that came in the review period helped the bourse notch its best weekly performance in over 8 months. Consequently, investors remain upbeat on the prospect of a major recovery in the equity market. The accent, which came in the secondary market since the beginning of December, is yet to lose its legs as the index still trades over 100 points higher above November's close. After life insurance and microfinance sectors led the earlier surge, investors are now flocking to buy commercial bank scrips expecting the heavyweights to drive the market to further highs. In the meantime, turnover crossed Rs 4 billion mark for the first time since June suggesting the rally being backed by notable market activity.

Class 'A' stock slightly outperformed the broader market with Sensitive Index rising 4.79% in the week. Most of the sectors closed the week higher, barring Trading, Hotels and Manufacturing & Processing segments which corrected slightly. Most of the microfinance sector components registered massive gains in the week. The group's sub-index shot up by 11.13%. Bellwether banks also logged in some of the best performance of the week which resulted in a 4.73% rise in the group's sub-index. Non-Life Insurance and Development Bank sub-index climbed over 3% each. 

Finance, Mutual Fund and Hydropower sectors, subsequently, posted gains of over 2% each. Life Insurance and 'Others' sectors also closed marginally higher.

Shares of Machhapuchhre Bank Ltd were heavily traded in the review period. More than Rs 265 million worth of the bank's shares changed hands. Similarly, NIC Asia Bank Ltd and Civil Bank Ltd Promoter Share posted turnovers of Rs 250 million and Rs 201 million, respectively. Shivam Cements Ltd, Grameen Bikas Laghubitta Bittiya Sanstha Ltd and Deprosc Laghubitta Bittiya Sanstha Ltd were among other active scrips of the week.

In the corporate space, Central Finance Ltd declared 7% cash dividend to its shareholders for Fiscal Year 2018/19 on Friday. The class 'C' financial institution had also made 7% payout in the previous fiscal year.

ARKS technical analysis indicates the market forming a large bullish candlestick on the weekly timeframe. Subsequently, the 5 and 20 period exponential moving averages (EMAs) have formed a golden cross which usually indicates possibility of further upward movement. 

Weekly momentum indicators also suggest that bulls are in complete control in the present context. For a confirmation, the 1,200–1,220 points range must be closely watched as a breakout above the zone might see the equity index target 1,250 points mark.

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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