Weekly Market Commentary

Stocks end week 1% higher, volumes make fresh records

Published On: May 28, 2021 09:48 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 28: The Nepal Stock Exchange (Nepse) index extended gains from prior week as the benchmark rose 32.81 points on Sunday. Stocks saw further advance on Monday but momentum tapered with the broad based index adding 3.05 points. Some correction was witnessed in the latter part of the week. Tuesday saw a modest 6.45-point’s decline in the equity market, while the exchange remained closed on Wednesday on the occasion of Buddha Jayanti. The benchmark ended little changed in the last trading session of the week closing with a 1.20-point’s dip. Overall, the gain tally for the week stood at 28.21 points or 1.01% as Nepse finsihed at 2,815.40. 

Following a rally of more than 100 points in the prior week, gains remained subdued in the review period. Though a few sectors witnessed correction, heavyweight BFIs, Hydropower and Insurance segments helped the market notch a fresh weekly closing high. Besides, average daily turnover shot up sharply as the market continued to witness influx of funds despite the prohibitory orders getting stricter in most parts of the country. On average, over Rs. 12.5 billion worth of shares were traded daily in the week on review. 

Class ‘A’ stocks moved in tandem with the broader index. The group’s gauge Sensitive Index climbed 0.95%. Sectors ended mixed. Hydropower, Trading, Development Bank and Finance sectors witnessed massive strength with the respective indices rallying 8.88%, 8.42%, 7.55% and 6.68%, respectively. Non-Life Insurance, Mutual Fund and Life Insurance segments followed suit with gains of 4.09%, 2.10% and 1.67%. Banking sub-index ended week up by 0.29%. On the other hand, Microfinance sub-index tanked 3.81% following NRB’s restrictions on BFIs to invest in shares of microfinance companies. ‘Others’ and Hotels & Tourism sub-indices close over 2% lower. Manufacutring & Processing and Investment subgroups also fell marginally.

On the weekly technical front, the equity market formed a small bullish spinning top candlestick on the weekly timeframe, indicating extension of the sort term upward move with some minor correction from a high of 2,850 mark. Further, back-to-back weekly turnovers of over Rs. 50 billion suggests significant buying enthusiasm and momentum favoring bulls in the current context. Formation of higher tops and higher bottoms has kept the short-term uptrend valid. Nonetheless, overbought readings in technical indicators point towards possibility of minor corrections in coming weeks. Support is provided by 2,735 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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