Daily market commentary

Nepse stretch correction to close below 2,500

Published On: February 28, 2021 07:45 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 28: Stocks came under pressure since the beginning of Sunday’s trading session. The Nepal Stock Exchange (Nepse) index fell around 50 points in the morning before recovering slightly. However, equities continued to falter further in the latter trading hours. At the close, Nepse finished 79.74 points lower at 2,474.39.

With the index falling 125 points in two days, the pullback has brought the index back below 2,500 level for the first time since early February. With investors still watchful of developments in the political scenario, investors are still refraining from taking any major buying positions in the current juncture. Panic selling in the early hours also stoked fear in the equity market contributing to an all-day slump. Total turnover stood at Rs. 8.35 billion.

All major sectors closed the day with notable loss. Only Hotels and Tourism index closed in green backed by Chandragiri Hills Ltd’s post listing rally. Investment index fell the most in its maiden trading session. The sector fell 4.2%. ‘Others’, Manufacturing & Processing and Life Insurance stocks also came under pressure as the respective sub-indies fell over 3.5%. Similarly, most of the other sectors fell around 3% each.

Shikhar Insurance Company Ltd was traded the most after the non-life insurer called for its Annual General Meetings (AGMs) for the years 18/19 and 19/20. Approval of bonus shares, issuance of right shares and increment of its authorized capital are among the meeting’s major agendas. Over Rs 1 billion worth of the insurer’s stocks changed hands. Nepal Infrastructure Development Bank Ltd followed suit with a turnover of Rs. 635 million. Global IME Bank Ltd, Nepal Reinsurance Company Ltd and Nepal Life Insurance Company Ltd registered turnovers of Rs. 340 million, Rs. 286 million and Rs. 257 million.

Chandragiri Hills Ltd stretched its surge with another 10% gain. Citizens Mutual Fund-2 and Shikhar Insurance Company Ltd climbed around 2.8% higher. NLG Insurance Company Ltd, Sagarmatha Insurance Company Ltd and Laxmi Unnati Kosh were among other gainers.

Ganapati Microfinance Bittiya Sanstha Ltd, on the other hand, suffered the most as its stock price fell 7%. Nepal Finance Ltd, Nepal Infrastructure Bank Ltd, Nepal Hydro Developers Ltd and Api Power Company Ltd’s shares also struggled with 6% declines each. Mainly other hydropower stocks dominated the list of major losing stocks.

As per the ARKS technical analysis, the index formed a strong bearish candlestick as the index closed below the psychological 2,500 level. Hence, further correction in the week is likely. The index’s reaction at 2,450 mark will be crucial for gauging further direction of the market. Momentum indicators also reflect sellers’ dominance of late.

This column is produced by ARKS Capital Advisors Ltd.

(Views expressed in the article are those of the producer and do not necessarily reflect those of this publication)


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