#Daily Commentary

Stocks give up Monday’s gain as pandemic fear heighten

Published On: August 5, 2020 08:30 PM NPT By: Republica  | @RepublicaNepal

Nepse ends 22 points down

KATHMANDU, Aug 5: The local bourse witnessed a delayed start on Wednesday due to technical error in the trading system. After opening 45 minutes late, stocks remained under pressure throughout Wednesday’s session. Nepal Stock Exchange (Nepse) benchmark index fell around 22 points initially in the opening minutes. After a recovery attempt, losses worsened further as the index traded almost 30 points lower in the afternoon. However, the exchange found some ground towards the close recouping some of earlier losses. Nepse ended at 1,382.25 points – down 21.61 points against previous close.

After opening the week with notable weakness on Sunday, Nepse found some footing around 1,400 points in Monday’s trading session and added around 7 points. However, losses grew on Wednesday as pandemic fear repressed investor confidence. With no major news on the economic front and rumors of lockdown, the market lacked any notable buying pressure. Meanwhile, fairly active market participation was witnessed as the bourse saw a turnover of Rs 1.23 billion. The broad decline saw all sectors close the day in red.

Turnover was led by Nepal Reinsurance Company Ltd as over Rs 136 million worth of its shares changed hands. Nepal Life Insurance Company Ltd, NMB Bank Ltd and NIC Asia bank Ltd were the other active stocks with turnovers of Rs 99 million, Rs. 72 million and Rs 49 million, respectively. Himalayan Distillery Ltd, Nabil Bank Ltd and Shikhar Insurance Company Ltd were among other active stocks.

Ajod Insurance Ltd and Arambha Chautari Laghubitta Bittiya Sanstha Ltd led the gains with rallies of 10 percent each. Nepal Finance Ltd closely followed with a gain of 9.88 percent. Api Power Company Ltd and Kalika Power Company Ltd, subsequently, posted a gain of 6.54 percent and 3.70 percent. Arun Valley Hydropower Development Company Ltd also rose 3.23 percent. On Wednesday, the company notified Nepse stating that it received approval from the Electricity Regulatory Commission for issuing 100 percent right shares.

In contrast, other energy stocks saw significant weakness. Ankhu Khola Jalabidhyut Company Ltd and Ghalemdi Hydropower Ltd tumbled over 9 percent each. Similarly, Rairang Hydropower Development Company Ltd and Dibyashwori Hydropower Ltd witnessed declines of around 7 percent each. Joshi Hydropower Development Company Ltd, Oriental Hotels Ltd and Nepal Seva Laghubitta Bittiya Sanstha Ltd also witnessed notable losses on Wednesday.

On the technical front, the index broke its immediate support of the 1,400-point mark with a bearish candlestick. Despite some buying pressure seen in the closing minutes, short term downtrend can be seen in action. Moving Average Convergence Divergence (MACD) has slid downwards after forming a dead cross which can be taken as an indication of some more downward movement. Similarly, Relative Strength Index (RSI) has fallen slightly from neutral territory indicating sellers gaining control. Further drop can see the index test 1,350 points mark. The movement then will be crucial in determining possible direction of the equity index for the short term.

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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