weekly market commentary

Nepse snaps five-week winning streak

Published On: October 6, 2018 09:04 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Oct 6: The benchmark Nepal Stock Exchange (Nepse) started the week on a lower note shedding more than 10 points on Sunday. Stocks further extended their losses dipping over 18 points on Monday's trading session. Despite the index recouping slight losses on Tuesday, weakness carried to the remaining trading sessions of the week. The index fell 10.76 points and 3.34 points on Wednesday and Thursday, respectively. Eventually, Nepse index recorded a weekly loss of 39.81 points or 3.14 percent to close at 1,227.37 points.

With the week's decline, Nepse posted a weekly loss after five weeks. The market, which was high on confidence in the previous weeks mainly led by banking sector stocks, witnessed a firm correction in the review period. 

The losses came amid profit booking and cashing out stocks by investors and traders ahead of the holiday season. 

A drop in total turnover also followed this week. Weekly market participation fell by 27.85 percent to Rs 2.39 billion, compared to the preceding week. 

Sensitive Index, which gauges the performance of Class 'A' stocks, mirrored the broader market with a loss of 3.34 percent. 

In terms of sectoral performances, all major sub-indices followed the broader market and ended firmly lower baring the Trading sub-index which advanced 4.22 percent. Development Bank stocks led the decline as its sub-index dipped 4.41 percent in the week. Hotels scrips also showed a significant move to the downside with its sub-index closing 3.90 percent lower. 

Weakness was also visible among Banking, Microfinance and Non-Life Insurance scrips with their respective sub-indices tumbling over 3 percent each. 

Banking shares, which account for a high percentage of market capitalization, were actively traded this week. Shares of Nepal Bank Ltd posted the highest turnover of over Rs. 144 million in the week. NMB Bank Ltd and Global IME Bank's scrips also remained active with total transactions of over Rs 129 million and Rs 124 million, respectively. 

Other top turnover stocks for the week include NIC Asia bank Ltd, Prabhu Bank Ltd, Machhapuchhre Bank Ltd and Kumari Bank Ltd. 

On the announcement front, Shree Investment and Finance Company Ltd announced a total dividend of 18.77 percent to its shareholders on Friday. 10 percent of the total payout will be paid as cash, while the remaining 8.77 percent would be distributed as stock dividend. The decision, however, is subject to approval from its Annual General Meeting (AGM). 

In other news, first Provincial Capital Market Expo, 2018 organized by Securities Board of Nepal (SEBON) has commenced on Friday. The exhibition, which is taking place at Jain Bhawan, Biratnagar for two days, will feature 120 stalls of institutions including Securities Board of Nepal, Nepal Stock Exchange and other securities related organizations. The expo aims to increase public awareness about the capital market. 

As per the ARKS technical analysis, the index witnessed a firm drop this week, with losses coming from 4 out of 5 trading sessions. Consequently, technical indicators suggest market losing its momentum while favoring the bears at present. The immediate support lies at 1,210 points where a movement in either direction with significant volume can indicate a possible course for the market. 

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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