Daily Market Commentary

Stocks correct slightly after hitting fresh high on Monday

Published On: June 15, 2021 09:13 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, June 15: The stock market crossed 3,050 mark for the first time in early morning trading on Tuesday, with Nepse opening at 3,064. However, stocks lost its footing on the back of aggressive profit booking paring all of the morning gains before mid-session. The index also fell below the opening level briefly in the afternoon. After hovering along the opening level towards the latter part of the session, Nepse ended the day with a decline of 3.72 points at 3,022.11.

The equity market lost some steam in Tuesday’s trading after registering two straight sessions with notable gains. The selling pressure came on the back of sharp pullbacks seen in development bank, finance and hydropower stocks, which were leading the market’s previous month move. Nonetheless, the bourse recorded an above par turnover of Rs. 16.53 billion.

Development Bank stocks were the major laggards as the group’s sub-index fell 4.42%. Finance and Hydropower segments also came under pressure losing 3.29% and 2.80% on the day. Microfinance, Banking, Trading, Life Insurance and Non-Life Insurance stocks fell slightly. On the other hand, ‘Others’ index rose 3.99%, followed by Investment index which climbed 2.07%. Hotels & Tourism, Manufacturing & Processing and Mutual Fund sectors closed in positive territory. 

Shares of Nepal Reinsurance Company Ltd were traded the most with a turnover of over Rs. 763 million. Hydroelectricity Investment & Development Company Ltd posted a transaction of Rs. 523 million, followed by Himalayan Distillery Ltd, which logged in a turnover of Rs. 420 million. Arun Valley Hydropower Development Company Ltd, National Hydropower Company Ltd and Lumbini Bikas Bank Ltd followed suit, posting turnovers of Rs. 346 million, Rs. 341 million and Rs. 324 million. 

CEDB Hydropower Development Company Ltd, Khanikhola Hydropower Co. Ltd and Union Hydropower Ltd bucked the trend and rallied over 10% each. Oriental Hotels Ltd and Hydroelectricity Investment & Development Company Ltd also saw strength and jumped 5.81% and 5.80%. Nepal Telecom Ltd, Himalayan Distillery Ltd, Gurkhas Finance Ltd and Prudential Insurance Company Ltd were among other major gainers. 

Chhyangdi Hydropower Ltd, Liberty Energy Company Ltd and Barun Hydropower Company Ltd’s shares suffered the most with each scrip plunging around 7% apiece. Shree Investment & Finance Co. Ltd, Nepal Hydro Developers Ltd, Saptakoshi Development Bank Ltd and Sindhu Bikash Bank Ltd also came under pressure posting declines of over 6% each. Other finance stocks followed suit. 

As per the ARKS technical analysis, the equity market formed a bearish candlestick reflecting sellers’ dominance after Nepse’s open at intra-day high. Nonetheless, against previous day’s close, loss remained minimal with the index shedding only 0.12% on day-to-day basis. However, heavy profit booking in some of the sectors point towards possibility of further correction. Momentum indicators, meanwhile, reflect overall short-term uptrend remaining intact. A retracement can see the index test immediate support at 2,960 mark. 

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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