Weekly Market Commentary

Nepse tumbles for four weeks in a row

Published On: February 16, 2019 10:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Stocks continued to struggle throughout the week as Nepal Stock Exchange (Nepse) index saw red in four out of the five trading days. 

The benchmark index ended firmly lower on Sunday with a loss of more than 12 points. Monday saw a modest gain of over 1 point while the index inched down 0.67 points on Tuesday. 

The last two trading days of the week witnessed losses of over 7 points and 8 points taking the weekly loss tally up to 26.7 points or 2.34 percent. The index settled at a fresh 3-year low at 1,112.87 points. 

The loss in the review period led the index to a fourth consecutive week of decline. The index also erased all the gains witnessed in December. 

Bearish pressure has persisted in the bourse as the market has not seen any major developments in the financial space that can provide an impetus to the equity market. Hence, the index has turned in another failed attempt to make a significant recovery from the long term downtrend forming newer lows in the weekly timeframe. 

The bourse has continued to experience insipid market activity. The weekly turnover stands at 3,037 million. 

However, the turnover figure comes on the back of substantial transactions of Everest Bank Ltd Promoter Share wroth almost Rs 2 billion carried out on Thursday. 

Sensitive Index, gauging the performance of Class 'A' stocks, moved on par with the broader market index. It sank 2.35 percent. 

Among sectors, weakness was visible among most of the sub-indices. Only Manufacturing & Processing and Trading sub-indices closed the week slightly higher. Insurance stocks came under substantial pressure in the week in review. 

Sub-indices of Life Insurance and Non-Life Insurance scrips shed 4.30 percent and 3.32 percent, respectively. 

Hydropower stocks also took a knock with its sub-index dropping more than 3 percent. Microfinance and 'Others' sub-indices, meanwhile, declined 2.58 percent and 2.46 percent, respectively. Market heavyweight Banking sub-index tanked over 2 percent. 

In terms of market activity, Everest Bank Ltd Promoter Share registered the highest turnover of Rs 1,918 million. Shares of Upper Tamakoshi Hydropower Ltd also continued to trade actively with weekly turnover of over Rs 62 million. 

Next, more than Rs 43 million worth of Prabhu Bank Ltd's shares changed hands. Other top turnover scrips for the week include Citizen Investment Trust, Nepal Credit and Commercial Bank Ltd and Nepal Life Insurance Company Ltd. 

Among major listings, 7.91 million right shares of Nepal Credit and Commercial Bank Ltd were listed in the week. Besides, Nepse listed bonus shares of Muktinath Bikas Bank Ltd, Nirdhan Utthan Laghubitta Bittiya Sanstha Ltd, Janaki Finance Ltd and Western Development Bank Ltd. 

As per the ARKS weekly technical analysis, the market formed a bearish candlestick stretching weekly losses to four weeks. Weekly Relative Strength Index (RSI) is on the verge of hitting oversold territory, while Moving Average Convergence/ Divergence (MACD) has also formed a dead cross. Hence, the sentiment remains fairly bearish where investors should maintain a watchful stance before making any significant investment.

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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