KATHMANDU, June 4: Following the unveiling of the budget for the coming fiscal year, the stock market witnessed substantial enthusiasm on Sunday with a record turnover of over Rs. 17 billion. The benchmark Nepal Stock Exchange (Nepse) index rose 12.53 points on Sunday. Nonetheless, with profit taking seen in most of the sectors on the following day, Nepse gave up 45.07 points on Monday extending its losses to Tuesday where it lost another 11.71 points. The equity market made a significant recovery towards the end of the week registering gains of 55.98 points and 29.64 points on Wednesday and Thursday. Nepse rose 41.37 points or 1.47% in the week to finish at a fresh record at 2,856.77.
The equity market marked its fifth straight week of gain on the back of record volumes. Sector rotation has mainly been the key factor in driving the equity market to fresh high, with investors switching to different sector after booking gains in one. Flow of funds into the market has also been at record levels as reflected by huge market participation of late. This week over Rs. 67 billion worth of shares changed hands, higher than any other week in Nepse’s history.
Sensitive Index rose 1.87% reflecting strength in Class ‘A’ stocks. Mainly BFIs were the major winners in the review period’s trading. Development Bank and Finance segments saw considerable strength and rallied over 17% each. Hotels & Tourism sub-index also shot up by 7.86%. Mutual Fund segment rose 5.52%. Banking, Manufacturing & Processing, ‘Others’ and Microfinance sub-indices also ended the day in green. On the other hand, Trading and Hydropower segments suffered the most, ending with declines of 5.46% and 4.49%. Investment sub-index also dipped 1.08%. Non-Life Insurance and Insurance segments dipped slightly.
On the corporate front, Nepse suspended trading of Khani Khola Hydropower Company Ltd citing failure to publish financial reports. The energy company reported negative book value as per its last financial report. The hydropower stock had surged almost 100% in the past month.
As per the ARKS weekly technical analysis, the market formed a bullish candlestick with long lower wick reflecting strength and recovery from the week’s low. Following a breakout from the previous weekly high, sentiment remains firmly positive in the current context. While some correction is due, strength seen in the BFIs will likely assist the market in maintaining ground in the coming week. Technical indicators also reflect extension of the uptrend with the formation of higher highs and higher lows in the weekly timeframe.
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)