Daily market commentary

Nepse snaps three-day winning run

Published On: February 5, 2020 11:44 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: The Nepal Stock Exchange (Nepse) witnessed indecision in the first half of Tuesday's trading. The Nepse index wavered around the opening level of 1,350 points till mid-session before finally succumbing to selling pressure in the closing hours. The late decline saw the benchmark index shed 12.09 points to end the day's trading at 1,337.05 points.

After hitting a fresh high on Monday, the index pulled back on Tuesday amid profit booking by investors. The index had added a total of 70 points in the six preceding sessions. The correction, however, should be carefully monitored as the index has reverted from 1,350 points mark twice in the span of 13 trading days, suggesting that the market is failing to make new highs. Meanwhile, the bourse has continued to record high volumes as almost Rs 1.6 billion worth of securities were traded on the day. 

Most of the sectors closed the day in red. Only Non-life Insurance, Development Bank, 'Others' and Finance sub-indices managed to close the day with modest gains. Hotels sub-index suffered the most as its sub-index ended 3.65% lower. Hydropower and Mutual Fund sub-indices dropped roughly 1.5% each, while Banking, Microfinance, Life Insurance and Trading sub-indices also registered declines of over 1% each. Manufacturing and Processing sector saw a modest loss.

Insurance scrips saw heavy transactions on the day. Nepal Insurance Co Ltd and Neco Insurance Co Ltd saw Rs 107 million and Rs 61 million worth of shares traded each. Nepal Life Insurance Company and Jyoti Bikas Bank Ltd registered turnovers of over Rs 40 million each. Garima Bikas Bank Ltd, Prabhu Bank Ltd and Global IME Laghubitta Bittiya Sanstha Ltd were among other active stocks of the day. 

Among major advances, share prices of Support Microfinance Bittiya Sanstha Ltd and Dibyashwori Hydropower Ltd hit the upper circuit of 10%. National Hydropower Company Ltd and Nepal Hydro Developers Ltd's shares also saw considerable strength, rallying 8.47% and 6.4%, respectively. Jyoti Bikas Bank Ltd, Vijaya Laghubitta Bittiya Sanstha Ltd and Prudential Insurance Company Ltd were the other top performing scrips of the day.

In contrast, Mithila Laghubitta Bittiya Sanstha Ltd suffered the biggest loss as its unit price tumbled 5.23%. Shares of Multipurpose Finance Company Ltd, Taragaon Regency Hotel Ltd, Mahila Sahayatra Microfinance Bittiya Sanstha Ltd and Butwal Power Company Ltd also came under pressure as their unit prices fell by over 4% each. Soaltee Hotel Ltd, Chilime Hydropower Company Ltd and Oriental Hotels Ltd were the other major decliners of the day.

Two commercial banks published their earnings for the second quarter of FY2019/20. While Agricultural Development Bank Ltd reported a 23% year-on-year growth in its earnings to Rs 1.58 million, Prabhu Bank Ltd reported a modest 4% growth in its net profit to Rs 1.08 million year-on-year.

According to ARKS analysis, the market formed a bearish candlestick erasing previous gains. The market saw some correction after a continuous rally in the week earlier. With technical indicators showing loss of momentum, there is a possibility of some further corrective movement. However, psychological support lies at 1,300 points which should act as a strong base for the market against faltering further. Nonetheless, its breach to the downside might see the market target the 1,280-point level.

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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