Nepse stretch weekly losses as global rout stokes fear

Published On: March 14, 2020 10:41 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, March 14: The Nepalese bourse remained closed on Sunday and Monday on national holidays with the exchange opening only three out of five  trading days. Stocks resumed trading on Tuesday where the benchmark Nepal Stock Exchange (Nepse) index saw massive selling pressure triggering three circuit breakers of 4%, 5% and 6% at different time intervals. In the truncated trading session of just over an hour, the index slid over 86 points. The market overturned its losses recouping over 73 points on Wednesday only to give up most of its gains in the last trading day of the week. Thursday saw a drop of 45.91 points. Overall, the index shed 58.52 points or 4.08 points in the week to end at 1,377.18. 

The stock market is recently seeing major indecision amidst unprecedented volatility in the past couple of weeks. Gains and losses of around 200 points in two consecutive weeks have stoked a sense of caution and uncertainty among investors. The correction seen in the week earlier was amplified this week as investors were spooked by global stock market rout. International share markets saw heavy losses in the week as World Health Organization (WHO) declared the COVID-19 outbreak as a pandemic.

Hence, escalating fear of the impact it could have on world economy, and corporate earnings fueled by an oil price war in the international market, weighed on the major exchanges. Consequently, domestic stock market's recovery momentum will likely remain affected, at least for the near term. Average daily turnover for the week stood at Rs 1.83 billion.

Class 'A' stocks also moved in tandem with the broader Nepse index as the Sensitive Index lost 3.97%. In terms of sector wise performance, Hotels segment was the major laggard dropping 6.46%. Similarly, Life Insurance sub-index tumbled 5.83% followed by Banking stocks which lost 4.37% in the week on review. Besides, Non-Life Insurance, 'Others', Development Bank, Manufacturing & Processing and Microfinance segments also came under pressure closing over 3% lower each. 

Nepal Life Insurance Company Ltd led the top turnover chart in each of the trading days of the week. In total, over Rs 520 million worth of the insurer's shares change hands. Furthermore, NIC Asia Bank Ltd, NMB Bank Ltd and Himalayan Distillery Ltd registered turnovers of Rs 345 million, Rs 284 million and Rs 228 million. Nabil Bank Ltd, Shivam Cements Ltd and Global IME Bank Ltd were also heavily traded in the review period.

In the financial space, Nepal Rastra Bank (NRB) took a slightly relaxed approach in terms of floating credit to organizations. As per the recent directive, firms will not be required to present tax clearance certificate for receiving loans of under Rs 5 million. Further, such limit is stretched to Rs 20 million for priority sector industries including agriculture, tourism and small and medium scale enterprises. 

In terms of ARKS technical analysis, the market formed a second straight bearish weekly candlestick as losses accentuated further. The bearish engulfing candlestick pattern formation in the week earlier followed by another bearish candlestick indicates sellers are significantly in control in the present context. Weekly momentum indicators also suggest that the market might continue in its bearish tone. Major support zone lies at 1,280-1,300 points where investors can look for a rebound for buying opportunities.

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