Daily Market Commentary

Nepse unchanged as sectors end mixed

Published On: June 11, 2021 05:25 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, June 11:Despite opening more than 20 points higher in the early hours, the Nepal Stock Exchange (Nepse) remained under pressure. Gains were truncated in the latter part of the session with some sectors dragging the benchmark lower. Nonetheless, Nepse managed to end Thursday’s trading essentially flat at 2,944.78. The day’s loss stood at 1.8 points or 0.06%. 

With investors switching sectors actively in the current context, intra-sector volatility now remains at all-time high. While few sectors corrected, others negated the downfall with gains. Besides, market activity has also intensified in the last couple of sessions. The bourse has witnessed turnovers of over Rs. 16 billion in three back-to-back sessions. 

Hydropower, Development Bank and Finance sectors continued to see gains. Sub-index of the former shot up by 2.92%, while those of the latter jumped up by 2.65% and 2.57%. Investment sub-index rose 1.05%, Mutual Fund segment added 0.78% and Microfinance stocks climbed 0.14%. On the other hand, Life Insurance and Trading sub-indices suffered and fell 1.44% and 1.21%, respectively. Banking segment dipped 0.93%. Manufacturing & Processing, Hotels and Tourism, Non-Life Insurance and ‘Others’ sub-groups also inched lower. 

Shares of Hydroelectricity Investment and Development Company Ltd were traded the most ahead of its book closure date for issuance for 100% right shares. Almost Rs. 1 billion worth of the scrip changed hands. Next, Nepal Reinsurance Company Ltd’s shares were heavily traded with a turnover of over Rs. 575 million. Lumbini Bikas Bank Ltd, Api Power Company Ltd and Neco Insurance Company Ltd followed with turnovers of Rs. 459 million, Rs. 446 million and Rs. 390 million, respectively. 

Hydropower stocks led the gains. Panchthar Power Company Ltd, Liberty Energy Company Ltd and Shiva Shree Hydropower Ltd rallied 10%. Ngadi Group Power Ltd, Mountain Energy Nepal Ltd, Chhyangdi Hydropower Ltd and Ridi Hydropower Development Company Ltd and Barun Hydropower Co. Ltd also shot up by more than 9%. Besides, finance and development bank saw considerable strength.

On the other hand, Gurkhas Finance Ltd corrected sharply after soaring around 180% in less than a month. The finance scrip fell 4.25%. Himalayan General Insurance Co. Ltd and United Insurance Company Ltd also pulled back more than 3% giving up some of its prior day gains. Life Insurance Corporation Ltd, Summit Laghubitta Bittiya Sanstha Ltd and Prabhu Life Insurance Ltd fell by over 2.5% apiece. Other insurance stocks came under pressure.  

As per the ARKS technical analysis, the index formed a small spinning top candlestick on the daily timeframe reflecting indecision in the equity market. With modest losses, possibility of consolidation remains high amidst mixed performance by composite sectors. Technical indicators point towards further gains overall, while possibility of minor corrections cannot be neglected. A deep correction can see the market find support at 2,850 mark. Whereas, another rally with noteworthy volume can indicate sustained momentum for extended upside move. 

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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