Weekly Market Commentary

Stocks extend August's sell-off

Published On: August 24, 2019 02:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Aug 23: The local bourse started the week's trading on a frail note as the Nepal Stock Exchange (Nepse) index dipped 9.2 points on Sunday. Monday saw the market make some recovery as the index recouped 7.23 points. Nonetheless, weakness persisted as the stocks faltered further in the latter trading days.

While Nepse slumped 8.43 points on Tuesday, it closed essential flat on Wednesday and Thursday. Eventually, Nepse closed the week at 1,213.06 points, registering a decline of 10.97 points or 0.90 percent compared to the week earlier.

Stocks have been witnessing constant selling pressure since the beginning of August. The index has dropped more than 52 points in the month so far. In the meantime, the index has marked its fifth straight week of decline.

Following a notable drop in a short span of time, selling pressure seems relatively exhausted in the present context with the traded volumes dipping in the recent sessions. Weekly turnover shrank by over 13 percent against the preceding week to Rs. 1,546 million.

Class 'A' stocks, though losing some ground, performed slightly better than the broader Nepse index. Sensitive Index edged 0.37 percent lower. On the sectoral front, most of the traded segments closed the week in the red. Only Trading sub-index managed to buck the trend with a 3.28 percent surge driven by substantial gains seen in Bishal Bazar Company Ltd's stocks.

On the other hand, Finance stocks were hit hard in the review period. The group's sub-index tanked more than 6 percent. Hydropower, Non-Life Insurance and Life Insurance sub-indices followed with losses of 3.33 percent, 2.76 percent and 1.72 percent. Hotels sector also dropped over 1 percent. Heavyweight banks witnessed a meager decline of 0.41 percent. Besides, all other sub-indices closed slightly in the red.

In terms of market activity, stocks of Soaltee Hotel Ltd were traded the most in the week on review. More than Rs 104 million worth of the hotel's shares changed hands. NIC Asia Bank Ltd's shares were also actively traded with a turnover of over Rs 91 million.

Other top turnover scrips include Rasuwagadhi Hydropower Company Ltd, Agriculture Development Bank Ltd and Nepal Investment Bank Ltd with turnovers of Rs 70 million, Rs 60 million and Rs 54 million. Other commercial banks followed suit.

In the week, Nepse listed 1.65 million unit shares of Sabaiko Laghubitta Bittiya Sanstha Ltd in the exchange. The microfinance opened trading on Thursday at Rs. 302 per share and soared more than 6 percent to end the session's trading at Rs 320 per share.

On Friday, Citizen Investment Trust announced it's Annual General Meeting (AGM) for the Fiscal Year 2017/18 to be held on September 16. The distribution of 22 percent bonus shares is its key agenda among others. Everest Insurance Company Ltd will also be convening its AGM on September 18. The insurer, however, will not be endorsing any dividends to its shareholders for the Fiscal Year 2017/18.

ARKS weekly technical analysis indicates the market forming a bearish candlestick for a fifth straight week. Relative Strength Index (RSI) has dropped below 50 points while Moving Average Convergence Divergence (MACD) is tilted downwards after forming a dead cross which indicates substantial selling pressure prevailing in the current juncture. However, the market has strong support around 1,200 points which might act as a key level for a possible rebound to follow. Hence, the movement around 1,200 points must be closely monitored before taking any major position in the equity market.

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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