Daily market commentary

Nepse snaps losing streak as hotels lead

Published On: October 1, 2019 08:28 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Stocks continued to see weakness in the morning trading on Monday. The Nepal Stock Exchange (Nepse) index fell as low as 1,121 in the initial trading hour but recouped all its losses by mid-session. Stocks saw strength thereafter with the index climbing throughout the remaining trading hours. Consequently, the benchmark index closed Monday's session up 10.42 points at 1,135.56 points.

With selling pressure subsiding continuously, the session on Monday saw buyers prevail helping the bourse snap its 4-day losing run. However, market participation remained subdued with pre-holiday effect still in action. Only Rs 169 million worth of shares changed hands on the day.

Monday's broad rally saw all traded sectors close higher. Only 'Others' sector suffered loss. Hotels segment led the day's advance as the group's sub-index shot up by 2.68 percent. Hydropower stocks also made notable recovery. The respective sub-index jumped 2.2 percent. 

Manufacturing & Processing, Non-Life Insurance and Life Insurance sub-indices followed suit and registered gains of at least 1.45 percent each. Meanwhile, Banking segment added almost 1 percent. All other indices edged higher.

In terms of market activity, Sunrise Bank Ltd was the day's most traded scrip with a turnover of over Rs 21 million. Prabhu Bank Ltd and Nepal Bank Ltd followed suit with turnovers of Rs. 13 million and Rs 11 million, respectively. Sanima Bank Ltd, Citizen Bank International Ltd and Shivam Cements Ltd were among other actives.

Energy stocks dominated the list of day's advances providing some respite to investors of the segment. Hydropower stocks have remained under continuous pressure in the past four months. Biggest percentage gain came from Sanjen Jalavidhyut Company Ltd. Its share price rallied 7.36 percent. Next, Union Hydropower Ltd and Joshi Hydropower Development Company Ltd saw gains of 5.88 percent and 5.56 percent, respectively. Similarly, Tinau Mission Development Bank Ltd and Sanima Mai Hydropower Ltd surged over 5 percent each.

In contrast, few hydropower stocks gave ground on the day. Mountain Hydro Nepal Ltd and Ankhu Khola Jalvidhyut Company Ltd saw losses of 3.7 percent and 3.63 percent, respectively. Further, Sanima Bank Ltd and Central Finance Co. Ltd closed more than 3 percent lower each. Multipurpose Finance Company Ltd, Arun Valley Hydropower Development Co. Ltd and Nepal Telecom Ltd were among other major decliners shedding over 2 percent each.

On the announcement front, Nepal SBI Bank Ltd declared 16.84 percent dividend to its shareholders for the Fiscal Year 2018/19. While 6 percent dividend will be endorsed in terms of bonus shares, the remaining 10.84 percent will be paid in cash.

The index, as per the ARKS technical analysis, formed a bullish candlestick on the daily timeframe erasing previous session's losses. Following the day's gain, technical indicators are now tilted upwards which can be taken as a preliminary sign of reversal. 

A break from previous high at around 1,180 will substantiate the reversal. However, with low volumes behind the current movement, the market lacks any real momentum for a sustainable rally to follow.

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