Daily Market Commentary

Nepse stretches losses for fourth straight day

Published On: May 6, 2019 03:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 6: Stocks faltered from the very beginning of Sunday's trading with the Nepal Stock Exchange (Nepse) index dropping more than 14 points within first hour. A failed attempt to comeback at midday saw the benchmark index slump further to 1,280 points mark. Eventually, Nepse closed the day at 1,277.68 points – down 16.71 points compared to Thursday's close.

Nepse stretched its correction further as the benchmark index closed in red for four consecutive sessions. Investors also seemed less enthused to participate in the market as turnover remained on relatively lower side of the spectrum. The bourse registered a total turnover of Rs 650 million.

Among traded sectors, all major sub-indices, except Manufacturing & Processing and Others, closed the day in red. Hydropower stocks saw significant weakness as the group's sub-index tanked more than 4 percent on the day. Similarly, Life Insurance and Microfinance scrips struggled with their respective sub-indices registering drops of 1.85 percent and 1.67 percent. Banking, Development Bank and Hotels sub-indices were also down by over 1 percent each, while Non-life Insurance and Finance sub-indices logged minor losses.

Shares of Nepal Bank Ltd were high in demand in the market. More than Rs 62 million worth of the bank's shares changed hands on the day. Similarly, shares worth Rs 46 million each of Prabhu Bank Ltd and Shivam Cements Ltd were traded on the day. Chilime Hydropower Company Ltd, NMB Bank Ltd and Agriculture Development Bank Ltd were other active stocks of the day.

Multipurpose Finance Ltd led the list of advances as its share price hit upper circuit of 10 percent. Share price of United Finance Ltd also surged by 4.71 percent followed by Shivam Cements Ltd which saw its share price rally by 4.07 percent. Nerude Laghubitta Bittiya Sanstha Ltd's share price was also up by 3.78 percent. NLG Insurance Company Ltd posted a gain of 3.52 percent. The insurer is holding its Special General Meeting (SGM) on May 28 to approve 60 percent rights issue. After the issue, the company's capital will reach the mandatory Rs 1 billion.

In contrast, share price of Chilime Hydropower Company Ltd tumbled 7.62 percent after the company reported a 17 percent year-on-year decline in its net profit in its financials for the third quarter of FY2018/19. The drop has been attributed to a significant increase in its operating expenses. Likewise, share prices of NIBL Samriddhi Fund 1 and Arun Valley Hydropower Development Company Ltd fell by over 7 percent each. Everest Insurance Company Ltd, Universal Power Company Ltd and Ngadi Group Power Ltd were among other losers, logging losses of 6.17 percent and 5.88 percent and 5 percent, respectively.

Among companies publishing their earnings report for the third quarter, Prabhu Bank Ltd reported a substantial 58 percent growth in its earnings. Its net profit stands at Rs 1.45 billion. Similarly, net profit of Muktinath Bikas bank Ltd also grew by over 40 percent year-on-year. Further, Sana Kisan Bikas Bank Ltd and Grameen Bikas Laghubitta Bittiya Sanstha Ltd reported 24 percent and 14 percent increment in their respective net profits.

As per the ARKS technical analysis, the market formed a bearish candlestick for the fourth straight day due to sell-off being triggered by profit booking sentiment of traders. Relative Strength Index (RSI) has dipped from the overbought zone while Moving Average Convergence Divergence (MACD) line has also eased following the sustained selling pressure. Hence, further downfall can be expected in the short run with the markets support resting at around 1,250 to 1,260 points range.

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