Daily Market Commentary

Nepse slides 45 points after five back-to-back close above 2,800 mark

Published On: May 31, 2021 09:54 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 31: The equity market saw strength in the beginning trading hour as the Nepal Stock Exchange (Nepse) index touched 2,850 mark briefly in the morning. However, aggressive profit taking continued thereafter. The index pulled back towards the opening level in the morning before making a brief recovery at mid-day. Gains remained truncated as selling pressure dragged the market in red in the latter part of the session. At Monday’s close, Nepse stood at 2,782.86 – a dip of over 45.07 points against the prior session.

After a consolidation above 2,800 mark for five consecutive sessions, the stock market finally gave in to the selling pressure amidst profit taking seen in most of the sectors. Nonetheless, volumes have remained upbeat. Following a record volume on Sunday, the exchange continued to see massive market participation. Almost Rs. 14 billion worth of shares changed hands on the day. 

All sectors fell sharply, barring Mutual Fund sector, which added 0.24%. Major loss came from Hydropower sector, which tanked 4.31%. Trading sub-index also tumbled 3.79%, followed by Non-Life Insurance and ‘Others’ sub-indices, which fell 2.57% and 2.41%. Life Insurance, Manufacturing & Processing, Development Bank and Banking sectors closed over 1% lower. All other sub-indices ended marginally in red. 

Radhi Bidyut Company Ltd witnessed massive turnover of over Rs. 910 million after the electricity producer proposed 147.52% right shares to its shareholders. The agenda of issuance is yet to be endorsed in its upcoming AGM. Lumbini Bikas Bank Ltd, Hydroelectricity Investment & Development Company Ltd and Nepal Reinsurance Company Ltd’s shares were also heavily traded with corresponding transactions of Rs. 402 million, Rs. 328 million and Rs. 327 million. Jyoti Bikas Bank Ltd, National Hydropower Company Ltd, Arun Kabeli Power Ltd and Api Power Company Ltd were among other active scrips. 

Radhi Bidyut Company Ltd and Central Finance Company Ltd bucked the trend and rallied to hit the upper circuit of positive 10%. Narayani Development Bank Ltd and Lumbini Bikas Bank Ltd witnessed considerable strength and jumped 7.43% and 6.38%, respectively. Gurkhas Finance Ltd, Soltee Hotel Ltd and Jyoti Bikas Bank Ltd, meanwhile, rose 4.64%, 3% and 2.48%. 

Conversely, Barun Hydropower Co. Ltd slumped 9.57% followed by Nepal Hydro Developers Ltd, which tanked 8.72%. Shares of Chhyangdi Hydropower Ltd, Mountain Hydro Nepal Ltd and Ridi Hydropower Development Company Ltd also came under pressure as each scrip tanked more than 8%. Other energy stocks followed, with Dibyashwori Hydropower Ltd, Kalika Power Company Ltd and Himal Dolakha Hydropower Company Ltd ending over 7% lower. 

As per the ARKS technical analysis, the market formed a strong bearish candlestick, suggesting sellers dominance in Monday’s trading. A sharp dip has brought the index close to its support at 2,735 mark where the index’s movement will be crucial for gauging the possible direction of the index in the short term. Overall, declining momentum indicators reflect possibility of further correction despite the overall uptrend remaining intact.

This column is produced by ARKS Capital Advisors Ltd.

(Views expressed in the article are those of the producer and do not necessarily reflect those of this publication)

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