Weekly Market Commentary

Nepse snaps six-week gaining streak with marginal loss

Published On: May 11, 2019 09:29 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 11: The benchmark Nepal Stock Exchange (Nepse) index began week with a decline of around 17 points on Sunday. Monday saw the equity index recoup all of the losses, while Tuesday was marked with a modest gain of around 2 points. 

Slight weakness was visible among latter trading sessions as the index registered a combined loss of over 9 points on Wednesday and Thursday's sessions. Overall, the index shed 2.43 points or 0.19 percent in the week to settle at 1,291.96 points. 

The buying pressure, which was fueled by upbeat earning reports, has subdued lately. Nepse posted a weekly loss after six weeks of advance where the index added almost 150 points in total. Subsequently, the equity index is consolidating in the current juncture as investors seem to digest corporate earnings news. 

Market participation fell in the week as the bourse registered a total weekly turnover of Rs 3.47 billion against Rs 4.41 billion in the previous week. 

Class 'A' stocks underperformed the broad index with the Sensitive Index dropping 0.47 percent. Traded sectors, meanwhile, turned in mixed performance in the week. 

Manufacturing & Processing stocks witnessed significant strength. The respective sub-index rallied 9.95 percent on the back of gains coming from sector heavyweight Shivam Cements Ltd. Its share price rallied almost 20 percent in the week. Trading sub-index also surged 5.32 percent. Hotels, 'Other' and Non-Life Insurance stocks also closed in the green. 

On the losing front, Hydropower sub-index tanked 5.67 percent. Next, Microfinance, Life Insurance and Finance sub-indices sank over 1 percent each. Banking and Development Bank sub-indices also edged lower.

In terms of market activity, Sanima Bank Ltd Promoter Share witnessed the highest transaction in the week. More than Rs 325 million worth of the shares changed hands. Shivam Cements Ltd and Nepal Bank Ltd followed suit with turnovers of Rs 236 million and Rs 180 million, respectively. Nepal Credit and Commercial Bank Ltd, NMB Bank Ltd and Prabhu Bank Ltd were among other top turnover scrips. 

In the week, the initial public offering (IPO) shares of Gurans Laghubitta Bittiya Sanstha were allotted to valid applicants on lottery basis. The issue, which was worth Rs 25 million, was substantially oversubscribed. 

Similarly, two microfinance companies are floating IPO shares from Friday. Janasewi Laghubitta Bittiya Sanstha Ltd is issuing 463,000 units shares, while 198,610 shares are being floated by Swabhimaan Laghubitta Bittiya Sanstha Ltd. ARKS weekly technical analysis indicates a spinning top candlestick formation reflecting indecision in the equity market. Though technical indicators suggest bullish sentiment prevailing, the market is trending near its psychological resistance of 1,300 points where a retracement is likely. 

Hence, investors are suggested to take a cautious stance. Further, a breach of 1,300 points mark to the upside supported by notable volumes might present opportunity to go long for short term. 

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