KATHMANDU: Trading began on the Nepal Stock Exchange (Nepse) on a positive note on Sunday. The benchmark Nepse index got off to a flying start gaining more than 9 points over the first hour. After dropping to its opening level at midday, another surge followed pushing the index to its intraday high.
However, the bourse failed to hold on to the gains as stocks witnessed a notable selling pressure toward the close pulling the index in the red. Nepse posted a moderate loss of 4.78 points to end the first trading day of the week at 1,167.86 points.
With bears slightly dominating Sunday's volatile trading session, Nepse snapped its 8-day
winning streak. The drop can be taken as a correction after a sustained rally witnessed in the first half of December.
The pullback can mainly be attributed to traders booking profit as many insurance and microfinance stocks saw gains of over 20%-25% in the short period. In the meantime, market has continued to witness active participation which can provide a firm ground for a major rebound. Over Rs 686 million worth of securities changed hands on the day.
Most of the sectors retraced following the broad-based index's fall. Only Trading, 'Others' and Banking sub-indices managed to eke out gains. Life Insurance sub-index, among others, pulled back steeply and gave up 2.62%.
Hotels and Microfinance stocks also suffered as reflected by a loss of over 2 points in their respective sub-indices. Likewise, Hydropower segment tumbled by 1.66%. All other sectors saw modest declines.
NMB Bank Ltd posted the highest turnover of the day with over Rs 63 million worth of shares traded. Nepal Bank Ltd followed suit with a turnover of Rs 45 million. Swabalamban Laghubitta Bittiya
Sanstha Ltd Promoter Share, correspondingly, registered a turnover of Rs 38 million.
NIC Asia Bank Ltd, Nepal Life Insurance Company Ltd and Shivam Cements Ltd were among other active stocks of the day.
Mainly hydropower stocks saw strength on the day. Union Hydropower Ltd led the list of advances with a gain of 9.09%. Similarly, Samriddhi Finance Company Ltd and Nepal Hydro Developers Ltd jumped saw their share prices go up by 8% each. Further, Sindhu
Bikash Bank Ltd, Ankhu Khola Jalvidhyut Company Ltd and Synergy Power Development added 5.56%, 5.08% and 4.21%, on their respective share prices.
On the other hand, microfinance and insurance stocks dominated the list of decliners. Support Microfinance Bittiya Sanstha Ltd was the worst performer of the day hitting the lower circuit of 10%.
Next, share price of RSDC Laghubitta Bittiya Sanstha Ltd tanked 7.51%, followed by Kalika Power Company Ltd, First Microfinance Development Bank Ltd and Lumbini General Insurance Co Ltd which saw respective share
prices go down by over 6% each. Prime Life Insurance Company Ltd and Asian Life Insurance Company Ltd were among other losing scrips of the day.
After dividend announcement by Prabhu Insurance Company Ltd in the previous week, IME General Insurance has become the second insurance company to announce dividend for FY2018/19. As per the insurer's notice to Nepse, it will be endorsing the agenda to distribute 6% bonus shares in its annual general meeting (AGM).
ARKS technical analysis indicates that the market formed a bearish candlestick on the daily timeframe. The spinning top pattern reflects high volatility and indecision on Sunday's session as Nepse snapped its longest winning run of the year 2019 so far.
Relative Strength Index (RSI) has pulled back after reaching overbought territory, suggesting some correction is on the cards. Meanwhile, the resistance of 1,180 firmly held ground as Nepse failed to climb the respective level. On a positive note, the breach of 1,180 points level can provide impetus to the secondary market to substantiate the rebound further.
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)