Daily market commentary

Nepse witnesses modest drop but volumes stay upbeat

Published On: February 25, 2020 09:25 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 25: Despite an early attempt by the bourse to stretch its rally, gains remained truncated throughout Monday's trading session. Following a sharp rally of around 28 points in the early morning, the Nepal Stock Exchange (Nepse) index saw a pullback. The index made further attempts to gather strength but sellers prevailed in the latter trading hours finally pushing the benchmark index in the red. The index lost 1.96 points to close Monday's trading at 1,502.18 points.

The drop came as a correction following six straight session of advances. Hence, the meager drop can be taken as a modest retracement rather than a sign of a reversal in the secondary market. Profit booking was visible in almost all sectors while heavyweight banks held to its previous day gains. On a more positive note, heavy market participation continued in the bourse. The exchange saw a turnover of over Rs 3 billion for a second consecutive day. Hence, selling pressure is being absorbed despite broad profit booking in the exchange.

Barring 'Others', Manufacturing & Processing, Banking sectors, which closed the day with moderate gains, all sectors closed in red. Non-Life Insurance segment retraced the most as its sub-index gave up over 3%. Trading sub-index, subsequently, posted a loss of 1.61%. Microfinance, Hotels and Hydropower segments also ended the day 1% lower. Besides, all other sectors inched lower.

NMB Bank Ltd led the list of actives as more than Rs 204 million worth of the bank's shares changed hands. Shivam Cements Ltd, Shikhar Insurance Company Ltd and Premier Insurance Co. Ltd saw turnovers of Rs 122 million, Rs 119 million and Rs 106 million, each. NIC Asia Bank Ltd, Himalayan Distillery Ltd and Nepal Bank Ltd were the other active scrips of the day.

Kalika Laghubitta Bittiya Sanstha Ltd was the best performing scrip as its share price rallied 10%. Manjushree Finance Ltd and Union Hydropower Ltd also surged over 9% each. RSDC Laghubitta Bittiya Sanstha Ltd, Nepal Hydro Developers Ltd, meanwhile, closed up by over 6%. NMB Bank Ltd, Nepal Investment Bank Ltd and Khanikhola Hydropower Co. Ltd were among other major advances.

On the other hand, Guheshowori Merchant Bank & Finance Co. Ltd suffered the most and fell 7.53%. Premier Insurance Company Ltd also fell 7.15% after the non-life insurer called its Annual General Meeting (AGM) for the year 2018/19, devoid of any agenda for dividend distribution. Prudential Insurance Company Ltd and Shangrila Development Bank Ltd's shares also came under considerable pressure losing 6% and 5%, respectively. Civil Laghubitta Bittiya Sanstha Ltd, Pokhara Finance Ltd and United Insurance Company Ltd were among other major decliners.

On the technical front, the market saw heavy profit booking on the day as reflected by a bearish shooting star candlestick formation. Nonetheless, the market has held its ground above 1,500 points mark. Given the market trades close to this level without major pullbacks, the uptrend will still be in action. Technical indicators also suggest that the market is yet to lose any momentum. Minor corrections can still be expected but the overall outlook remains bullish in the present context.

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