Daily market commentary

Nepse snaps losing spree with a 26-point rally

Published On: September 18, 2019 10:03 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: After witnessing substantial losses on Sunday and Monday, the equity market made a notable recovery on Tuesday. The Nepal Stock Exchange (Nepse) remained unchanged in the initial trading, but shot up in the afternoon to trade over 28 points higher. 

Despite a slight pullback, the index rose in the final hour to close the day slightly off its intraday high at 1,150.74 points. The daily gain stood at 26.91 points or 2.39 percent.

Tuesday's surge saw the index recoup most of its early week's losses while also breaking its 8-session rout. Though investors found some respite from the continuous downfall, the gains that came on the day were relatively small against the steep losses incurred in the past couple of months. 

Market participation also improved with the exchange witnessing a turnover of Rs 384 million – an increase of 12 percent against prior session.

The broad rally saw all major sectors climb higher. Manufacturing and Processing segment, driven by Shivam Cements Ltd's rally, turned in the best performance. The group's sub-index jumped 4.52 percent. Hydropower stocks which remained under constant pressure also made a marked recovery. The respective sub-index surged 4.27 percent. 'Others' and Hotels sub-indices climbed over 3 percent each. 

Heavyweight banks also saw strength as the group's sub-index added over 2 percent. All other sub-indices ended the day in green.

Siddhartha Bank Ltd led the list of actives. More than Rs 34 million worth of the bank's shares changed hands after the bank announced 25 percent dividend for the Fiscal Year 2018/19, the highest among its counterparts for the year so far. The dividend includes 10 percent bonus shares and 15.26 percent cash payout. Nepal Bank Ltd and Nepal Life Insurance Company Ltd followed suit with turnovers of Rs 29 million and Rs 28 million, respectively.

Biggest gain of the day came from Shivam Cements Ltd with the share price hitting the upper circuit of positive 10 percent. Similarly, Gurans Laghubitta Bittiya Sanstha Ltd, Radhi Bidyut Company Ltd and Api Power Company Ltd posted gains of over 9 percent each. Karnali Development Bank Ltd, Arun Kabeli Power Ltd and Mithila Laghubitta Bittiya Sanstha Ltd were among other top gainers which closed over 8 percent higher each.

On the other hand, Everest Insurance Co. Ltd was the major laggard tumbling 5.59 percent. Ankhu Khola Jalvidhyut Company Ltd and Citizen Bank Ltd also posted losses of over 5 percent each. Further, Sindhu Bikash Bank Ltd dropped 4.76 percent, while Sanima Equity Fund and Kalika Power Company Ltd fell 3 percent and 2 percent, respectively.

On the announcement front, Infinity Laghubitta Bittiya Sanstha Ltd proposed 15.79 percent dividend. While 10 percent dividend will be endorsed as bonus shares, remaining 5.79 percentwill be distributed as cash dividend.

ARKS technical analysis indicates the market forming a bullish candlestick on the daily timeframe erasing previous session's losses. With the sharp gain, technical indicators also suggest selling pressure losing steam. 

However, a significant shift in momentum is yet to be observed. On a positive note, the market is trading around its multi-year low. Hence, the index holding ground above this level might see the secondary market substantiate its reversal from the recent slump.

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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