KATHMANDU, July 12: Nepse registered a positive start to Monday’s session with the Nepal Stock Exchange (Nepse) index opening almost 30 points higher. The index pulled back slightly to trade along with the opening level throughout the beginning trading hour. However, selling pressure prevailed with the index plunging more than 50 points in late afternoon following the supreme court’s direction to reinstate the parliament. Consequently, investors took a defensive approach with the immediate political outlook remaining unclear, refraining from taking any major long positions. At the close, Nepse fell 44.98 points to end the session at 2,854.84.
While stocks saw major strength on Sunday with the index recovering more than 70 points, the decision from the court of last resort marred investor’s sentiment as reflected by Monday’s massive dip. Along with overturning Prime Minister KP Sharma Oli’s decision to dissolve the House of Representatives, the court also ordered President to appoint Nepali Congress leader Sher Bahadur Deuba as the new prime minister. Nonetheless, to secure his position, Deuba will have to win the vote of confidence from the parliament within 30 days of appointment. The political tumult will play a key role in driving the market’s movement, with investors likely to stay apprehensive until a clear political outlook is evident. Monday’s dip was accompanied by a massive jump in the turnover. Almost Rs. 10 billion worth of equities changed hands on the day.
Barring the Mutual Fund sector, all other segments mirrored the broader index. The biggest losses came from the Hotels & Tourism sub-group as the sub-index sank 3.03%. Sub-indices of Investment, Hydropower and Development Bank stocks also declined more than 2% each. All other sectors saw firm losses. Bellwether bank stocks dipped 1.12% on average.
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Shares of Nirdhan Utthan Laghubitta Bittiya Sanstha Ltd was the most heavily traded scrip of the day with a total transaction of over Rs. 473 million. NIC Asia Bank Ltd and Rashtriya Beema Company Ltd Promoter Share followed suit with turnovers of Rs. 349 million and Rs. 297 million. Chhimek Laghubitta Bittiya Sanstha Ltd, Nepal Bank Ltd, and Manjushree Finance Ltd were among other actively traded stocks.
Samriddhi Finance Company Ltd bucked the trend and closed more than 5% higher. Everest Bank Ltd Convertible Preference Share climbed 1.47%. Central Finance Company Ltd, Sarathi Nepal Laghubitta Bittiya Sanstha Ltd and Shree Investment & Finance Co. Ltd eked out modest gains.
On the other hand, Union Hydropower Ltd, Khanikhola Hydropower Co. Ltd and Oriental Hotels Ltd tanked more than 5%. Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd, Shiva Shree Hydropower Ltd, Hydroelectricity Investment & Development Company Ltd and Himal Dolakha Hydropower Company Ltd’s shares also came under pressure registering losses of over 4% each.
As per the ARKS technical analysis, the index formed a strong bearish candlestick on the daily timeframe suggesting notable selling pressure in the day. A close firmly below the opening level suggests sellers’ control in the equity market. Technical indicators point towards slight correction or consolidation with strong support at the psychological 2,800 marks. A rebound with volume will indicate the possibility of another move to the upside.
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)
