Daily Market Commentary

Stocks give up Tuesday’s gains as volumes falter

Published On: June 23, 2021 05:25 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, June 23: The Nepalese equity market opened firmly in green but slipped sharply in the morning. The index fell more than 20 points in the morning, before climbing above the prior close briefly. Further, stocks struggled after mid-day falling below 2,900 mark. A steady decline in the latter trading hours saw the benchmark fell 53.88 points to end at 2,859.96.

While the index recovered sharply after a plunge of almost 200 points on Tuesday, Wednesday saw continuation of the downfall. Volumes also shrunk on the day. Only Rs. 8.36 billion worth of shares changed hands as investors took cautious approach in the secondary market amidst high volatility in the sessions of late.

Development Bank, Finance and Hydropower sectors pared prior day gains. The respective sub-indices tumbled 3.69%, 3.05% and 2.33%. Life Insurance, Trading, Microfinance and Hotels & Tourism sub-indices also saw declines of more than 2%. All other sectors closed the day firmly in negative territory.

Shares of Nepal Reinsurance Company Ltd topped the list of active stocks. Rs. 543 million worth of the equities changed hands. Nepal Insurance Company Ltd, Radhi Bidyut Company Ltd and National Hydropower Company Ltd registered turnovers of Rs. 420 million, Rs. 384 million and Rs. 339 million. Hydroelectricity Investment & Development Company Ltd, Arun Valley Hydropower Company Ltd and Nepal Telecom Ltd were the other heavily traded stocks on Wednesday. 

Radhi Bidyut Company Ltd, Ngadi Group Power Ltd were the day’s biggest gainers. Both scrips shot up by more than 9%. Chhyangdi Hydropower Ltd, Nepal Insurance Company Ltd and Ghalmedi Hydro Ltd posted gains of over 6% apiece. Ankhu Khola Jalbidhyut Company Ltd, Hydroelectricity Investment & Development Company Ltd and National Hydropower Company Ltd also saw considerable strength to end the day with moderate gains. 

Kalika Power Company Ltd, Nepal Finance Ltd, Manjushree Finance Ltd, Nepal Hydro Developers Ltd and Arun Kabeli Power Ltd were the major laggards with each scrip closing the day with a drop of more than 5%. Multipurpose Finance Ltd, Miteri Development Bank Ltd, Panchthar Power Company Ltd and Himal Power Partner Ltd’s shares also came under pressure with losses of more than 4%. 

As per the ARKS technical analysis, the index formed a bearish candlestick on the daily timeframe with the market giving up most of the prior day gains. Further movements of more than 50 points in the past four sessions suggest high volatility and indecision in the equity market. Momentum indicators reflect short-term weakness with probability of consolidation above 2,835-support mark. Meanwhile, a breach of the support can see the market enter a deeper correction phase. 

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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