Daily Market Commentary

Stocks close flat in lackluster trading

Published On: January 25, 2019 07:51 AM NPT

KATHMANDU: The market opened for trading on a slightly positive note and added more than 2 points in the morning session. However, stocks came under pressure as the Nepal Stock Exchange (Nepse) index erased all its initial gains by midday. The benchmark index then wavered along the unchanged line to close the last trading day of the week 0.20 points lower at 1,172.78 points. 

The local bourse has seen a significant drop in market participation in recent sessions amid lack of conviction witnessed among investors. Only Rs 315 million worth of shares changed hands on Thursday.
Further, the index has been trending in a confined range since the beginning of January in the absence of any major impetus in the secondary market.

Sub-indices turned in mixed performance contributing to the negligible movement of the broader index. ‘Others’ sub-index was up 1 percent, followed by Manufacturing & Processing and Non-Life Insurance sub-indices which registered gains of 0.55 percent and 0.3 percent, respectively. The sub-indices of Development Bank and Hotels segments also edged higher. Meanwhile, Hydropower sub-index fell by 0.71 percent. Similarly, the sub-index of bellwether banks was down 0.2 percent, while Life Insurance, Microfinance and Finance sub-indices also closed the week in red.

Citizens Investment Trust and Upper Tamakoshi Hydropower Ltd were the poplar scrips for the investors as the companies registered turnover of over Rs 33 million each. Next on the list of active stocks was Prabhu Bank Ltd with Rs 15 million worth of shares traded. The bank published its earnings report for second quarter of FY2018/19, posting a 73.48 percent growth on its net profit to Rs 1,043 million.

Hydroelectricity Investment and Development Company Ltd and Chhimek Laghubitta Bittiya Sanstha Ltd’s shares logged total transactions of over Rs 11 million each.

Kankai Bikas Bank Ltd was the biggest gainer of the day as the development bank’s share price jumped up by more than 5 percent. Citizens Investment Trust stretched its gains to third straight day, logging adding 4.98 percent on its share price. Share price of Forward Community Microfinance Bittiya Sanstha Ltd also appreciated by 4 percent. Share prices of Tinau Development Bank Ltd and Kisan Microfinance Bittiya Sanstha Ltd also closed over 3 percent higher.

Among losing scrips, Janata Bank Nepal Ltd Promoter Share shed more than 8 percent. Microfinance scrips followed suit as Nagbeli Laghubitta Bikas Bank Ltd and Nepal Seva Laghubitta Bittiya Sanstha Ltd posted declines of 5.23 percent and 4.19 percent, respectively. Sanima Equity Fund and Central Finance Co. Ltd also saw their share prices go down by over 3 percent each.

On the earnings front, Tinau Development Bank Ltd reported a 1.94 percent year-on-year growth in its net profit as per the company’s earnings report for the second quarter of FY2018/19. World Merchant Banking & Finance Ltd, however, saw its net profit drop by a substantial 90 percent due to a massive clump in its interest income.

As per the ARKS technical analysis, the market formed a doji candlestick on the daily timeframe indicating indecision in the secondary market. Technical indicators, meanwhile, suggest slight bearish sentiment prevailing in the current juncture. A breach of 1,160-point mark to the downside might see the index falter further. Nonetheless, the market is trending above the support zone of around 1,160-1,170 points where a short term bounce back can be expected.

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