Daily market commentary

Nepse snaps four-day losing run

Published On: August 8, 2019 02:30 AM NPT By: Republica

KATHMANDU, Aug 8: Weakness carried over to morning trading on Wednesday as the Nepal Stock Exchange (Nepse) fell to 1,240 points initially. However, the benchmark index saw some strength after midday and recouped the initial losses. Subsequently, the index traded in the green for the remaining trading hours and closed 2.75 points higher at 1,248.48 points.

After shedding values for four straight days, the selling pressure eased off slightly on Wednesday. The strength seen on the day can also be attributed to a directive issued by the finance ministry to Securities Board of Nepal (Sebon) for resolving the issue regarding the calculation of capital gains tax (CGT) within three days. Though stakeholders held a meeting last week to resolve the matter, no official statement was released. Meanwhile, market participation remained low as only Rs 369 million worth of shares were traded on the day.

Most of the sub-indices logged gains on the day. Only, Hydropower, Mutual Fund and Development Bank sub-indices closed the day in the red. The decline in the hydropower sector was driven by a slump seen in the share price of recently-listed Rasuwagadhi Hydropower Company Ltd and Sanjen Jalavidhyut Company Ltd. The trading sector led the gains with is sub-index soaring by 2.75%. Microfinance sub-index recouped its previous day losses, posting a gain of 1.48%. Hotels sub-index also climbed up by 0.96 %. All other sub-indices closed marginally higher.

Shares of Agricultural Development Bank Ltd were traded the most on Wednesday. More than Rs 24 million worth of the commercial bank's shares changed hands on the day. Next on the list was Nepal Credit and Commerce Bank Ltd with over Rs 23 million worth of shares traded. Nepal Bank Ltd, Prabhu Bank Ltd and Nepal Life Insurance Company Ltd with respective turnovers of Rs 19 million, Rs 16 million and Rs 15 million.

The share price of Nepal Agro Laghubitta Bittiya Sanstha Ltd, which fell significantly in the previous session, hit the upper circuit of 10% on Wednesday. Similarly, Gurans Laghubitta Bittiya Sanstha Ltd, Sparsha Laghubitta Bittiya Sanstha Ltd and Swabhimaan Laghubitta Bittiya Sanstha saw their respective share prices rally by 9%, 8% and 7%.

In contrast, share prices of Sanjen Jalavidhyut Company Ltd and Rasuwagadhi Hydropower Company Ltd tanked by almost 10% each on the second day of listing. Besides, NIBL Pragati Fund and Api Power Company Ltd registered losses of over 3% each. Nabil Equity Fund, Himalayan Urja Bikas Company Ltd and Laxmi Equity Fund were among other losing securities shedding at least 2% each.

In the corporate space, Laxmi Bank Ltd published its financials for the fourth quarter of FY2018/19, reporting a 33% year-on-year growth in its net profit. The bank's net profit grew to Rs 1,576 million compared to Rs 1,181 million in the same quarter of FY2017/18. Nirdhan Utthan Laghubitta Bittiya Sanstha also saw its earnings grow by over 32% year-to-year to Rs 739 million. Other microfinance companies, including Mahila Sahaytra Microfinance Bittiya Sanstha Ltd, Unnati Microfinance Bittiya Sanstha Ltd and Samudayik Laghubitta Bittiya Sanstha Ltd also reported remarkable growth in their respective financials.

The benchmark index, as per ARKS technical analysis, formed a small bullish candlestick, breaking its losing spree. The index has found some ground at a 1,240-point mark. However, the overall sentiment is yet to see some improvement as the index has lost almost 70 points since the beginning of June. Hence, for a major shift from the current trend, a breach of 1,285-point level with noteworthy volume will be crucial. Meanwhile, immediate support lies at 1,240-1,250 points zone.

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