Daily Market Commentary

Stocks end lower as interest rates weigh on the equity market

Published On: October 20, 2021 07:27 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Oct 20: The local bourse remained under pressure since the beginning of Tuesday’s session. After dipping over 60 points in the morning a small recovery ensued. However, buyers quickly lost steam as sellers dominated the trading session thereafter. The benchmark index hit its intraday low at 2,582 before making a small final hour rebound. Eventually, Nepse closed the day with a dip of 77.33 points at 2,510.73.

Stocks have continued to make new lows dragged by a continuous bout of liquidity and interest rate news. With majority of banks raising their interest rates, investor sentiment remains majorly subdued. Turnover rose slightly to Rs. 3.78 billion on the day. 

All sectors fell sharply, with major losses coming from Finance, Hydropower and Development Bank sector. The respective sub-indices tanked 5.09%, 4.47% and 4.14%. Heavyweight banks, meanwhile, shed 2.83%. All other sectors, ended firmly lower. 

Nabil Bank Ltd and Api Power Company Ltd were the most actively traded stocks with turnovers of over Rs. 111 million and Rs. 99 million. National Hydropower Company Ltd, Himalayan Distillery Ltd and NIC Asia Bank Ltd were among other active stocks.

Among gainers, Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd and Manushi Laghubitta Bittiya Sanstha Ltd saw strength. Both stocks were up by over 4% at close. Mountain Energy Nepal Ltd rose 3.55% recouping prior day losses. Mero Laghubitta Bittiya Sanstha Ltd, Kalika Laghubitta Bittiya Sanstha Ltd and Mithila Laghubitta Bittiya Sanstha also saw strength. 

Nepal Hydro Developers Ltd and National Hydropower Company Ltd’s shares suffered with dips of over 9% apiece. Arun Valley Hydropower Development Company Ltd and Mailung Khola Jalbidhyut Company Ltd closely followed ending over 8% lower. Other, energy and finance stocks followed suit. 

On the technical front, the index formed a firm bearish candlestick with a small lower wick. Though the session remained dominated by bears, a small recovery towards end from 2,500 mark shows possibility of a short term rebound. Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) reflect selling pressure. A shift in indicator direction can also help gauge possibility of Nepse’s rebound. 2,500 mark will be the key support zone, a recovery from which will suggest end of correction. A breach towards the downside, meanwhile, suggests possibility of further retracement towards 2,400 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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