Daily market commentary

Nepse surges 50 points in two-day rally

Published On: September 19, 2019 10:22 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: The benchmark Nepal Stock Exchange (Nepse) index, which started Wednesday's session at 1,150.74 points, witnessed a sharp rally in the initial trading hour. The index climbed as high as 1,172 points in the morning but gave up most of its gains by mid-session. 

Nonetheless, a final hour surge saw the index close slightly above its morning's high at 1,173.42 points with a gain of 22.68 points against Tuesday's close.

The two-day ascent pushed the equity index almost 50 points higher, recouping all the losses that came in five prior sessions. Investors continue to remain sanguine following Tuesday's broad rally. 

Buyers' dominance, hence, helped the bourse extend its winning run for a second consecutive day. 

The market was also partly driven by value investors entering the market as most of the scrips have dropped to some of the cheapest levels in the 2-month long slump. In the meantime, the broad surge was accompanied by an increase in market participation. Total turnover stood at Rs 477 million – up 24% compared to the session earlier.

All traded sectors, barring one, posted notable moves to the upside. Trading sub-index remained unchanged. Hotels segment were among the best performing groups with its sub-index shooting up by 3.68%. Insurance scrips also witnessed significant strength. Sub-index of Life Insurance stocks rallied 3.4%, while that of Non-Life Insurance shares jumped 3.28%. Meanwhile, Microfinance and 'Others' sub-indices posted gains of around 2% each. Market heavyweight Banking stocks' sub-index also closed 1.77% higher.

Highest involvement was witnessed in Shivam Cements Ltd's trade. Over Rs 62 million worth of the cement manufacturer's shares changed hands. Siddhartha Bank Ltd followed suit with a turnover of over Rs 44 million. Next, Nepal Bank Ltd and Nepal Life Insurance Company Ltd registered transactions of over Rs 26 million and Rs 21 million, respectively. 

Sunrise Bikas Bank Ltd's stocks were also actively traded following the bank's dividend announcement on Wednesday morning. 

As per its notice to Nepse, the bank will be endorsing 10% stock dividend and 5.8% cash dividend to its shareholders from Fiscal Year 2018/19's earnings.

Sindhu Bikash Bank Ltd, among advances, hit the upper circuit of positive 10% followed by Samata Microfinance Bittiya Sanstha Ltd and Ridi Hydropower Development Company Ltd which also rallied almost 10% each. Correspondingly, Global IME Laghubitta Bittiya Sanstha Ltd's shares closed over 9% higher. 

Surya Life Insurance Company Ltd, Gurans Laghubitta Bittiya Sanstha Ltd and Himalayan General Insurance Co Ltd were among other top gainers with each climbing at least 8%.

On the other hand, shares of Karnali Development Bank Ltd suffered the most giving up more than 4.54% in the session. Furthermore, Ngadi Group Power Ltd, Corporate Development Bank Ltd and Excel Development Bank Ltd witnessed declines of over 3% each. 

Nabil Equity Fund, Shine Resunga Development Bank Ltd and Sagarmatha Insurance Co Ltd also came under significant pressure in the day's trading.

ARKS technical analysis indicates the market forming two consecutive bullish marubozu candlesticks on the daily timeframe which reflects buyers' dominance in the respective sessions. Following the rally, technical indicators also suggest the market gaining momentum which might pave way for a notable rebound. 

Moreover, the rally was accompanied by improvement in traded volumes. Hence, overall further upward movement can be expected in the upcoming sessions with minor corrections on the run.

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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