Daily Market Commentary

Stocks ease after a day of big rally

Published On: September 27, 2018 06:15 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 27: The Nepal Stock Exchange (Nepse) index gained as much as 8 points within the opening half hour of trading, as strength carried over from the previous day to the initial trading hours of Wednesday. However, the benchmark index pared all of its early gains in the remaining session. Despite a slight pullback toward the close, the index posted a modest loss of 2.31 points, or 0.18 percent, to end the day's trading at 1,277.74 points.

Stocks ended slightly lower on Wednesday as the buying pressure eased off slightly following a gain of more than 22 points on Tuesday. The retracement seen on the day can also be attributed to profit booking by short-term traders. On a positive note, the market added to its recent active trading sessions with an above average turnover of Rs 914 million.

Most of the sectors maintained negative bias while closing little changed. Manufacturing & Processing stocks struggled on the day, reflected by a drop of 0.76 percent in its sub-index. Finance and Hotels sub-indices followed suit, losing 0.50 percent each. Development Bank, Non-life Insurance and Banking stocks also closed marginally lower on the day. However, Life Insurance sub-index edged 0.54 percent higher while 'Others' sub-index added a marginal 0.09 percent.

In terms of market activity, banking stocks remained the most sought-after stock for investors, led by Kumari Bank Ltd. More than Rs 62 million worth of the commercial bank's shares changed hands on the day. NMB Bank Ltd was next on the list with turnover of over Rs 60 million. Shares of Nepal Bank Ltd, Civil Bank Ltd, Prabhu Bank Ltd and Mega bank Ltd were among other active stocks, registering turnover of over Rs 40 million each.

Samata Microfinance Bittiya Sanstha Ltd led the table of advancing stocks, as its share price climbed almost to the upper circuit level of 10 percent. Share price of Green Development Bank Ltd also went up by 7.83 percent. Additionally, Bhargav Bikas Bank Ltd prolonged its rally with a gain of over 5 percent. Other gaining stocks were Gurkhas Finance Ltd, Shangrila Development Bank Ltd and World Merchant Banking and Finance Ltd which added over 3 percent each on their share prices.

On the contrary, share price of Nepal Community Development Bank Ltd suffered the most as its share price plunged 5.79 percent. Ngadi Group Power Ltd's stocks also skidded over 5 percent. Meanwhile, share price of Bottlers Nepal (Tarai) Ltd fell by 3.57 percent. Ridi Hydropower Development Company Ltd, Kailash Bikas Bank Ltd and Prabhu Bank Ltd were among other losing scrips of the day.

Among the companies declaring dividends, Kailash Bikas Bank Ltd announced 17 percent cash dividend to its shareholders. The agenda is yet to be approved from its upcoming annual general meeting (AGM). Correspondingly, Swabalamban Laghubitta Bittiya Sanstha Ltd declared 36.84 percent dividend on the day, including 25 percent bonus shares and 11.84 percent cash payout.

ARKS technical analysis indicates the market seeing a slight correction, following the previous day's surge. Relative Strength Index (RSI) has reached the overbought zone, suggesting further retracement likely in the near term. Nonetheless, the overall market sentiment remains fairly bullish as the index trends firmly above 1,270-point mark. Nepse's bounce back from 1,270 points in the short run can see the index surge to the psychological resistance of 1,300 points.

This column is produced by ARKS Capital Advisors Ltd www.arkscapitaladvisors.com
(Views expressed are those of the producer and do not necessarily reflect those of this publication)

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