Daily Market Commentary

Stocks cap week with a 12 point drop

Published On: May 6, 2021 07:00 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 6: Stocks opened Thursday’s session in green but gave up early gains quickly as the Nepal Stock Exchange (Nepse) index fell around 18 points in the morning. A recovery pushed the index close to the opening mark, but the market failed to climb towards positive territory. Stocks came under some pressure thereafter with the Nepse closing session at 2,637.13 – down 12.47 points against Wednesday’s close.

The index has continued to see small movements as the market lacks conviction. A recovery from 2500 has brought the index above 2,600 marks, but only few sectors were the major contributors in the short-term surge. Meanwhile, larger BFIs and insurance companies are yet to see any notable buying interest. Hence, some uncertainty is visible in the present context. On a positive note, turnover has remained upbeat. Market participation crossed Rs. 6 billion marks for a third straight day.

The hydropower segment saw correction after a significant move upward in the past week. The group’s sub-index fell 1.86%. Life Insurance and Hotels & Tourism sectors also struggled and dipped around 1.3% each. Microfinance and ‘Others’ sub-indices closed over 1% lower. All other sectors closed in red, barring Banking, Finance and Investment groups, which eked out modest gains.

Shares of Hydroelectricity Investment and Development Company Ltd were traded the most with a turnover of over Rs. 467 million. Nepal Credit and Commerce Bank Ltd closely followed with a turnover of Rs. 430 million. Laxmi Bank Ltd, APi Power Company Ltd and Nepal Infrastructure Bank Ltd registered transactions of Rs. 265 million, RS. 157 million and Rs. 151 million, respectively. Other top turnover scrips of the day were, Prabhu Insurance Company Ltd, Grameen Bikas Laghubitta Bittiya Sanstha Ltd and National Life Insurance Company Ltd.

Janautthan Laghubitta Bittiya Sanstha Ltd rallied 10% after price adjustment for 49.4% bonus shares. Khani Khola Hydropower Company Ltd also shot up by 10%. Among other major gainers, Mahila Laghubitta Bittiya Sanstha Ltd, Samata Gharelu Laghubitta Bittiya Sanstha Ltd, Ru Ru Jalbidhyut Pariyojana Ltd, Union Hydropower Ltd, Joshi Hydropower Development Company Ltd and Laxmi Bank Ltd jumped over 9% each.

Meanwhile, Bishal Bazar Company Ltd and Singati Hydro Energy Ltd fell sharply and posted declines of 10% and 9.07%, respectively. Ngdi Group Power Ltd tanked 8.57%. Synergy Power Development Ltd, Kalika Power Company Ltd, Shiva Shree Hydropower Ltd and Mountain Hydro Nepal Ltd followed suit with declines of around 4% each. Besides mainly energy stocks and microfinance stocks dominated the decliners list.

On the technical front, the index formed a small bearish candlestick on the daily timeframe reflecting sellers prevailing in the session. With the index closing above 2,600 mark for six consecutive days, the market is likely to consolidate further in the current range. However, a breach of the support at 2,600 might suggest a short term correction with a major support lying at 2,500. Both Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest neutral momentum in the current context.

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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