Weekly Market Commentary

Nepse up marginally after four weeks of decline

Published On: July 6, 2019 04:00 AM NPT By: Republica

KATHMANDU, July 6: Stocks witnessed relatively higher volatility in the week as the Nepal Stock Exchange (Nepse) index saw fluctuations by more than 30 points during the week.

The index fell more than 12 points on Sunday, while it extended its losses by almost 3 points on Monday. Though the benchmark index made significant recovery on Tuesday and Wednesday logging gains of over 26 points, stocks came under some pressure on Thursday pulling the index 8 points lower. Eventually, the index closed the week with a marginal gain of 3.32 points, or 0.26%, at 1,260.47 points.

Following the week's advance, Nepse index snapped its 4-week losing streak. Further, selling pressure remained relatively subdued in the week as investors seemed to look past the index's downfall amid news of mergers and acquisitions of some commercial banks. Further, the year-end selling also seems to be losing steam as the index held ground above the psychological 1,250-point mark. Market participation also improved with the bourse registering total turnover of Rs 2,670 million in the review period compared to Rs 2,523 million a week earlier.

Sensitive index, which measures the performance of Class 'A' stocks, also edged higher. The index climbed up by 0.11%. Sub-indices registered moves toward either side of the spectrum. Gains mainly came from Non-life Insurance, Life Insurance and Microfinance scrips with the respective sub-indices adding over 1% each. Development Bank, Banking and Mutual Fund sectors also ended the day in green.On the other hand, Hotels stocks suffered the most. The group's sub-index sank 1.56%. Trading, 'Others' and Finance sub-indices followed suit and fell by 0.99 %, 0.83 % and 0.74 %, respectively. Manufacturing & Processing and Hydropower sub-indices also registered minimal losses.

Shares of Nepal Bank Ltd continued to trade actively as more than Rs 207 million worth of the commercial bank's shares changed hands this week. Other banks followed suit, as Prabhu Bank Ltd and Mega Bank Ltd registered turnover of over Rs 164 million and Rs 130 million, respectively. Shivam Cements Ltd, Global IME Bank Ltd Promoter Share and Civil Bank Ltd also witnessed active trading during the week.

On corporate front, Ghodighoda Laghubitta Bittiya Sanstha Ltd began floating its Initial Public Offering (IPO) shares from Friday. The microfinance, through its issue manager Prabhu Capital Ltd, will be issuing Rs. 13.26 million worth of shares. In other news, two commercial banks - Global IME Bank Ltd and Janata Bank Nepal Ltd -- are set to merge following Nepal Rastra Bank's direction to find appropriate merging partners. Chairpersons of both the banks signed agreement for the same on Friday.

As per ARKS weekly technical analysis, the market formed a spinning top candlestick with long wicks, reflecting substantial volatility and indecision in the equity market. Further, technical indicators also present absence of any concrete direction in the market. A bullish candlestick in the following week with increased volume might suggest a plausible upward movement nonetheless.

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