KATHMANDU: After a brief rise early in the morning, the Nepal Stock Exchange (Nepse) index pulled back sharply and shed more than 10 points within the first hour of Wednesday's trading session. Nonetheless, the index recouped all of its losses to close the day with a moderate gain. At the close, Nepse settled at 1,405.25 points – up 5.24 points against the session earlier.
Stretching its gaining streak to four days, the index has held ground above 1,400 points mark suggesting a sharp correction unlikely in the coming session. The recent rally has also been backed by massive a turnover which suggests investors taking long positions heavily. In the day, microfinance stocks led the charge, while banking, insurance and other stocks held on to their respective gains. Hence, the recovery of the equity market is yet to lose its pace significantly. Over Rs 1.63 billion worth of equities changed hands on the day.
In terms of sector wise performance, Microfinance sub-index jumped 4.34% as roughly all of its component stocks ended up considerably higher. Manufacturing & Processing sub-index followed with a 3.49% rise that came on the back of Himalayan Distillery Ltd's rally. Trading, 'Others', Hydropower and Development Bank segments also edged higher. Non-Life Insurance sub-index, on the other hand, slid marginally with a 0.78% drop. Finance sub-index shed 0.49%. Banking, Life Insurance, Mutual Fund and Hotels sectors ended slightly in red.
Shivam Cements Ltd and Himalayan Distillery Ltd were the most actively traded stocks. The scrips registered turnovers of Rs 147 million and Rs 129 million, respectively. Grameen Bikas Laghubitta Bittiya Sanstha Ltd posted turnover of Rs 66 million, while NIC Asia Bank Ltd and Sana Kisan Laghubitta Bittiya Sanstha Ltd saw turnovers of Rs 60 million apiece. Shikhar Insurance Company Ltd, Swabalamban Laghubitta Bittiya Sanstha Ltd and Nepal Life Insurance Company Ltd were among other active stocks.
Microfinance stocks dominated the list of major gainers. Asha Laghubitta Bittiya Sanstha Ltd and Samudayik Laghubitta Bittiya Sanstha Ltd jumped exactly 10% each. Similarly, Bottlers Nepal Terai Ltd, Kalika Laghubitta Bittiya Sanstha Ltd and Civil Laghubitta Bittiya Sanstha Ltd remained locked in the upper circuit limit with advances of over 9% each. Himalayan Distillery Ltd, Sana Kisan Bikas Bank Ltd and Ghalemdi Hydropower Ltd were among other major advances.
In contrast, Multipurpose Finance Company Ltd's shares suffered the most hitting the lower circuit of negative 10%. Progressive Finance Ltd and Mountain Hydro Nepal Ltd's shares also came under pressure with drops of 3% each. Rastriya Beema Company Ltd, Sanima Equity Fund and NIBL Samriddhi Fund 1 closed down by over 2% each.
As per ARKS technical analysis, the market formed a bullish candlestick stretching gains to four straight sessions. Hence, significant strength still is present in the market with the index refusing to falter below the crucial 1,400 points mark. Moving Average Convergence Divergence (MACD) has formed bullish cross confirming short term uptrend. Meanwhile, Relative Strength Index (RSI) line has reached overbought zone which suggests the market might face correction in the coming sessions. However, the overall outlook remains firmly bullish.
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)