Daily Market Commentary

Stocks rally on interest rate optimism

Published On: December 24, 2018 11:07 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Dec 24: Stocks began the week's trading on a sanguine note with the benchmark Nepal Stock Exchange (Nepse) index rallying 23 points in the beginning of Sunday's session. 

The index pulled back slightly but maintained a positive bias throughout the remaining session. A further surge towards the end followed pushing the index up to 1,198.18 points – up 32.24 points compared to the previous day's close.

Nepse saw its biggest gain in five months as the Nepal Bankers' Association (NBA) decided to put restrictions on interest rates on deposits bringing such rates significantly lower. The restraint came on the heels of many commercial banks hiking interest rates to more than 13 percent in the past weeks. Consequently, investors expressed enthusiasm to actively participate in the market with the bourse recording a total turnover of over Rs 875 million. 

Insurance and microfinance scrips were the top picks among investors in the secondary market. Non-Life Insurance sub-index jumped almost 6 percent followed by sub-indices of Microfinance and Life Insurance which surged 4.82 percent and 4.57 percent higher, respectively. The day's broad rally also saw the Hotels sub-index climb 3.74 percent. 

Meanwhile, sub-index of the heavyweight Banking segment also advanced 2.43 percent. All other sectors, except Manufacturing & Processing segment, closed the day in green. 

Sunrise Bank Ltd Promoter Share saw the highest turnover in the day. More than Rs 81 million worth of the securities were traded. Correspondingly, NMB Bank Ltd's shares also continued to trade actively with a total transaction of Rs 71 million on Sunday. 

Shares of Nepal Bank Ltd and Prabhu Bank Ltd followed suit with turnovers of Rs 48 million and Rs. 44 million, respectively. Chhimek Laghubitta Bikas Bank Ltd, Prime Commercial Bank Ltd, and Nepal Investment Bank Ltd were among other active scrips on the day. 

On the gainers front, three traded scrips surged to hit the upper circuit of 10 percent. The advances include IME General Insurance Ltd, Lumbini General Insurance Co Ltd, and Kalika Laghubitta Bittiya Sanstha Ltd. Similarly, Nagbeli Laghubitta Bikas Bank Ltd, Gurans Life Insurance Company Ltd and Womi Microfinance Bittiya Sanstha Ltd posted gains of almost 10 percent each. 

On the other hand, Kailash Bikas Bank Ltd posted a loss of 6.25 percent on the day following its book closure on Friday for the purpose of carrying out its Annual General Meeting (AGM). The development bank is due to distribute 17 percent cash dividend to its shareholders. Shares of United Modi Hydropower Ltd also suffered and sank almost 5 percent. Other losing scrips include Rairang Hydropower Development Company, Saptakoshi Development Bank Ltd and Himalayan Distillery Ltd which shed 2.75 percent, 1.98 percent and 1.94 percent, respectively. 

In the news, Lumbini Bikas Bank Ltd declared 17.35 percent bonus shares to its shareholders from its profit of fiscal year 17/18. Its share price shot up by 9.82 percent following the announcement. 

ARKS technical analysis indicates the market forming a bullish marubozu candlestick reflecting a sustained buying pressure throughout Sunday's session. Hence, noteworthy bullish sentiment prevails in the market. 

Nonetheless, the market is now trending just below the psychological resistance of 1,200 points. Its breach may see the index rise further to 1,120 points, while the immediate support for the market lies around 1,160 points. 

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