KATHMANDU, March 11: The benchmark Nepal Stock Exchange (Nepse) index witnessed a notable drop in the initial trading giving up roughly 50 points in the morning. The equity market attempted a recovery within the first trading hour but the broad selling pressure dragged the market further in the red.

Consequently the index hit its first hour circuit breaker mark of negative 4% at mid-day before the trading was suspended for 20 minutes. On resumption, the benchmark hit another negative circuit breaker at 5%. After a brief trading, Nepse shed over 6% as the trading for the whole day was halted. Nepse closed Tuesday's session down 86.39 points at 1,349.31 points.

The profit booking and correction, witnessed since the beginning of last week, was further accentuated by fear of economic impact of ever-growing number of cases of coronavirus infection around the world. With international market facing some of their steepest losses, Nepse also took cues from such panic selling. However, investors remain uncertain over the possible course of the Nepalese equity market. Hence, many continue to flee the equity market in panic and switch to cash as a safe haven. The shortened trading day, where the session remained open for just over an hour, saw a total turnover of over Rs 1 billion.

All sectors contributed to the slump in the equity market. Life Insurance and Trading sectors were the major laggards with declines of 9.1% and 7.86%, respectively. Hotels and Banking segment also saw considerable weakness as sub-indices of both shed over 6% each. Besides all other sectors registered notable declines.

Shares of Nepal Life Insurance Company Ltd registered the highest turnover of the day with transactions worth Rs 86 million. NIC Asia Bank Ltd closely followed with a turnover of Rs 82 million. NMB Bank Ltd posted a turnover of Rs 68 million, while Nabil Bank Ltd and Global IME Bank Ltd logged in turnovers of over Rs 40 million each. Himalayan Distillery Ltd, Prabhu Bank Ltd and Citizen Investment Trust Ltd were among other active scrips.

Few stocks ended in green on Tuesday. NIBL Samriddhi Fund 1 outperformed as its unit price rose 3.76%. Next, RMDC Laghubitta Bittiya Sanstha Ltd and Citizens Mutual Fund-1 saw advances of around 2% apiece. Other gainers for the day include Ghalemdi Hydro Ltd, Universal Power Company Ltd and Barun Hydropower Co Ltd.

Neco Insurance Co. Ltd and Life Insurance Co Nepal registered the worst performances of the day with both tumbling over 10% each. Everest Insurance Company Ltd, Nepal SBI Bank Ltd and National Life Insurance Company Ltd closely followed with declines of roughly 10%. Manjushree Finance Ltd, Standard Chartered Bank Ltd and Salt Trading Corporation lost over 9% each.

On the news front, Prime Life Insurance Company Ltd has declared 12.5% bonus shares for the year 2018/19. Whereas, it is still due to announce dividends for the last fiscal year – FY2019/20.
On the ARKS technical front, Nepse index formed a bearish candlestick on the daily timeframe stretching its losing streak for three consecutive days. The index broke through its support of 1,400 points and is now resting on another support of 1,350 points where the next movement will be crucial.

However, technical indicators like Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest more downfall likely. Hence, investors are suggested to go long only if a substantial rebound occurs in the market with notable volume.

 
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