Daily Market Commentary

Nepse slips as development bank sector fails to sustain its gain

Published On: June 9, 2021 08:01 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, June 9: After trading briefly above the 3,000 mark, the benchmark of Nepalese equities pulled back firmly towards opening 2,960 level. Following a failed attempt to recoup early morning gains, the broader market remained under pressure in the latter half of the session. Nepse ended the day with a modest loss of 13.56 points to end Wednesday at 2,946.58. 

While all of the sectors opened in positive territory, heavy profit booking in some sectors led to Wednesday’s decline. Even though some sectors are losing momentum following massive rallies in the past month, relatively subdued stocks have garnered enthusiasm from investors of late. Hence, the broader market’s losses remained under check. Market participation continued to be on the higher side of the spectrum with two back-to-back sessions with almost Rs. 17 billion of turnover. 

Sectors ended mixed with Development Bank stocks failing to sustain gains after massive rally in the past week. The group’s sub-index lost 4.41%. ‘Others’ and Investment stocks also came under pressure with the respective gauges falling around 1% each. Banking, Hydropower, Microfinance and Hotels/Tourism sub-indices ended marginally lower. On the other hand, Manufacturing & Processing stocks soared 3.98%. Finance and Trading segments climbed 2%. Non-Life Insurance, Life Insurance and Mutual Fund sectors managed to eke out marginal gains. 

Arun Valley Hydropower Development Company Ltd saw heavy volumes. More than Rs. 879 million worth of the energy stocks changed hands. Nepal Reinsurance Company Ltd and Nepal Insurance Company Ltd, next, registered transactions of Rs. 618 million and Rs. 511 million. Lumbini Bikas Bank Ltd, United Modi Hydropower Ltd and Shivam Cements Ltd posted turnovers of Rs. 483 million, Rs. 471 million and Rs. 398 million. 

Among winners, Nepal Insurance Company Ltd and United Modi Hydropower Ltd turned in the best performances of the day with both scrip surging 9.95%. Similarly, Ridi Hydropower Development Company Ltd, Arun Valley Hydropower Development Company Ltd and newly listed CEDB Hydropower Development Company Ltd shot up by over 9%. Barun Hydropower Co. Ltd, Pokhara Finance Ltd and Prabhu Insurance Ltd also saw strength with gains of more than 9%. 

United Idi Mardi RB Hydropower Ltd, on the other hand, plunged as the stock closed almost 10% lower. Development Bank stocks followed suit. While Mahalaxmi Bikas Bank Ltd and Shine Resunga Development Bank Ltd tanked over 6%, Miteri Development Bank Ltd, Garima Bikas Bank Ltd, Lumbini Bikas Bank Ltd, Shangrila Development Bank Ltd and Sindhu Bikas Bank Ltd tumbled more than 5%. Other finance stocks followed suit. 

The index, according to ARKS technical analysis, formed a strong corrective candlestick attributable mainly to the aggressive profit taking seen on development bank stocks. However, volumes have remained upbeat as other sectors helped Nepse hold its footing despite a modest loss. Both Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators show strong bullish movement of late. Though some minor corrections can be expected, the overall trend has remained intact, especially on the back of notable turnovers of late. 

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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