KATHMANDU, Dec 15: The equity market showed some sign of improvement this week after the benchmark Nepal Stock Exchange (Nepse) index hit one of the lowest levels seen in the last three years in the week earlier. Significant gains came from Sunday and Monday where the index added over 10 points and over 12 points, respectively.
The initial surge in the week eased off on Tuesday with the index shedding a modest 3 points. Nonetheless, the market advanced further in the remaining two sessions taking the index up to 1,148.78 points. Consequently, Nepse closed the week 27.94 points or 2.49 percent higher.
The stock market ended its brutal stretch of weekly losses which came on the heels of rising interest rate fears among investors in the secondary market. Despite the interest rates persisting to stay on the higher side in the present context, the bourse showed some signs of recovery after the recent slump. As a result, the index clawed back all its losses that came in the preceding week. However, the broad gains can only be seen as a correction, while there is still no clear sign of significant turnaround. Further, lack of any major development in the capital market remains as a major concern, keeping the market from making notable shift from the recent downtrend. Market participation has also remained on the lower side of the spectrum. The local bourse posted a total turnover of Rs. 1,637 million in the review period.
The rally in the week sent the major stock gauge, the Sensitive Index, up 2.67 percent for the week. Correspondingly, all of the major sub-indices closed the week in green barring the Hotels sub-index which was dragged by the sector leader Soaltee Hotel Ltd. The hotel closed its shareholders book on Wednesday for the purpose of carrying out its Annual General Meeting (AGM) which is due to approve 10 percent bonus shares and 16.32 percent cash dividend to its shareholders.
On the gainers front, Hydropower sub-index surged the most and added 4.99 percent after Chilime Hydropower Company Ltd's shares surged 8.5 percent in the week on dividend announcement. The energy sector company declared 20 percent stock dividend and 5 percent cash payout to the respective shareholders. Sub-index of heavyweight banking segment also rallied 3.18 percent. Insurance scrips also made a fair recovery after continuous downfall as sub-indices of Non-Life Insurance and Life Insurance groups climbed 2.79 percent and 2.66 percent, respectively. Strength was also visible among Development Bank and Finance stocks, with the respective sub-indices adding 2.22 percent and 1.35 percent.
Among major announcements in the week, Bank of Kathmandu Ltd proposed 25 percent dividend to its shareholders including 14 percent bonus shares and 11 percent cash dividend. Furthermore, Janata Bank Nepal Ltd declared 8.50 percent cash dividend, while Citizens Bank International Ltd will be distributing 3.63 percent bonus shares and 1.64 percent cash dividend.
ARKS weekly technical analysis indicates the index making a partial recovery after the market lost more than 100 points in the preceding four weeks. Following the weekly gain, the Relative Strength Index (RSI) rose slightly from the oversold zone, while Moving Average Convergence Divergence (MACD) is still trending in the negative territory. Hence, the sentiment seems fairly neutral in the present context.
This column is produced by ARKS Capital Advisors Ltd www.arkscapitaladvisors.com
(Views expressed are those of the producer and do not necessarily reflect those of this publication)