Daily market commentary

Nepse tumbles further despite positive dividends outlook

Published On: August 30, 2019 08:03 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Aug 30: After falling below 1,200 points for the first time in this fiscal year in the previous session, the local equity market witnessed a lackluster trading session on Thursday. The last trading day of the week saw the index waver along with the opening level before closing the day at 1,196.41 points with a modest loss of 1.33 points.

Consequently, the index ended August's trading with a total loss tally of almost 70 points. Bears have remained in control for the entire month with gains coming in only 5 out of total 20 trading sessions.

In the meantime, few commercial banks have announced dividends for the year. Though the announced dividends are mostly higher compared to the previous fiscal year, investors have found no respite from the short term downtrend. Thin trading was witnessed with only Rs 277 million worth of shares exchanged on the day.

Most of the sectors closed the day lower. Only Development Bank and Banking sub-indices managed to eke out marginal gains. In contrast, Manufacturing & Processing stocks were the biggest laggards with the group's sub-index dropping 1.26 percent.

Life Insurance sub-index fell 0.91 percent, while Trading sub-index closed 0.83 percent lower. All other sectors closed the day with marginal losses.

Shares of Kumari Bank Ltd led the list of active stocks. Over Rs 16 million worth of the bank's shares changed hands. Nepal Life Insurance Company Ltd posted turnover of over Rs 14 million. Other commercial banks followed suit as NIC Asia Bank Ltd, Prabhu Bank Ltd and Machhapuchhre Bank Ltd registered turnovers of Rs 13 million, Rs 11 million and Rs 10 million, respectively.

Among advances, shares of Sabaiko Laghubitta Bittiya Sanstha Ltd extended its rally with a 10 percent gain. NLG Insurance Ltd recouped 3.72 percent, while Union Hydropower Ltd and Excel Development Bank Ltd posted advances of 3.39 percent and 3.35 percent. Kalika Power Company Ltd, Miteri Development Bank Ltd and Janaki Finance Ltd were among other top gaining scrips.

Conversely, United Finance Ltd turned in the worst performance of the day. Its share price tanked over 6 percent. Secondly, Karnali Development Bank Ltd fell 3.7 percent. Microfinance stocks followed as Mithila Laghubitta Bittiya Sanstha Ltd, Grameen Bikas Laghubitta Bittiya Sanstha Ltd, Naya Nepal Laghubitta Bikas Bank Ltd and Summit Laghubitta Bittiya Sanstha Ltd saw losses of over 3 percent each.

As banks continue to declare dividends for the year, Machhapuchhre Bank Ltd will be endorsing 16 percent dividend to its shareholders. The dividend includes 11 percent cash payout and 5 percent bonus shares. In the earnings front, Rairang Hydropower Development Company Ltd published its fourth quarterly financials on Thursday reporting a net profit of Rs 117,455. Its previous year's net profit stood at Rs 48,820.

As per the ARKS technical analysis, the index formed a spinning top candlestick reflecting indecision after the index's drop below 1,200 points mark. Investors remained cautious before taking any significant positions on the either side. Nonetheless, the sentiment still remains bearish as indicated by technical indicators. Hence, investors are suggested to refrain from going long unless a momentous reversal is visible in the equity market.

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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