Weekly Commentary

Stocks post weekly losses as valley faces a week-long lockdown

Published On: August 22, 2020 08:21 PM NPT

KATHMANDU, Aug 22: The local bourse opened the review period on a weak note as the benchmark Nepal Stock Exchange (Nepse) index fell over 17 points on Sunday. Nonetheless, Nepse erased early-week losses mid-week with Monday and Tuesday witnessing gains of 10.75 points and 5.68 points, respectively. While the index pulled back another 16.6 points on Wednesday, the last trading day of the week saw the index make a modest recovery. Nepse added 6.28 points on Thursday. Overall, the index ended the week 11.22 points or 0.8 percent lower at 1,397.57 points.

The exchange experienced a roller coaster week earlier, where the index saw massive fluctuations rallying in the beginning but pulling back sharply towards the weekend. Mainly heavyweight banks and development banks reporting drop in their earnings drove the volatile week. Weakness carried over to this week’s trading as well, but the trading remained relatively composed. Further, the index hovered between a narrow range between 1,385 and 1,410 levels in the review period showing signs of consolidation. Turnover remained upbeat except on the last trading day of the week, which marked the beginning of a week’s lockdown. Rs 4.94 billion worth of securities were exchanged on the day.

Class ‘A’ stocks underperformed the broad based index notably. Sensitive Index fell 1.86 percent. Among sectors, Development Bank and Banking sectors were the major laggards. While the former sank 2.15 percent, the latter registered a loss of 1.91 percent. Mutual Fund and Microfinance segments also declined almost 1 percent each. Hotels, Manufacturing & Processing, Finance and Hydropower sub-indices fell marginally. On the other hand, the Trading sector jumped 4.39 percent, followed by ‘Others’ sub-group which shot up by 2.34 percent. Non-Life Insurance sub-index added 1.24 percent, while Life Insurance sub-index inched 0.04 percent higher.

This week, three companies have opened their initial public offering (IPO) shares to the public. The issuance includes 6.3 million unit shares of Reliance Life Insurance Ltd, 3.5. million unit shares of Liberty Energy Company Ltd and 86 thousand unit shares of Samaj Laghubitta Bittiya Sanstha Ltd.

In terms of ARKS weekly technical analysis, the index formed a bearish spinning top candlestick on the weekly timeframe. Despite the bourse registering a decline, the trading range has narrowed down significantly suggesting uncertainty in the current scenario. Weekly Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) reflect neutral sentiment. Nonetheless, with the index trading higher than its 20-day and 50-day exponential moving averages (EMAs), the general trend favors bulls in the current juncture.

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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