Daily Commentary

Stocks stretch advance with massive volume jump

Published On: August 25, 2020 08:00 AM NPT By: Republica  | @RepublicaNepal

Nepse benchmark index surges 22 points

KATHMANDU, Aug 24: The Nepal Stock Exchange (Nepse) saw upbeat trading since the beginning of Monday’s session. The Nepse index climbed 8 points early in the morning and plateaued at mid-day. A sharp rally around mid-session helped the benchmark hit its intraday high at 1,433 points. Following a brief correction in the afternoon, the index staged a steady rebound to close the day at 1,431.61 points – up 21.61 points against the session earlier.

Contrary to the expectation of subdued trading in the lockdown, the index has seen two consecutive volume jumps. The exchange, consequently, registered at turnover of over Rs 2 billion, its highest since late July. With the majority of investors embracing online transaction and payment system, the stock market has seen active volumes in spite of the prohibitory orders in action. Further, with the majority of other businesses and services remaining closed, the stock market, being one of the few open sectors, has continued to see active participation.

Non-Life Insurance stocks have continued to be the go-to stock for the majority of traders and investors. Buoyed by remarkable growth in earnings, the sector has continued to outperform the market and has been witnessing a steady surge since early August. The group’s sub-index climbed another 1.85 percent on Monday. Life Insurance and Microfinance stocks also saw decent upward movement, as the respective sub-indices rose 2.34 percent and 1.87 percent. Trading, ‘Others’ and Banking sub-indices also climbed over 1 percent higher each. All other sectors ended the day higher, barring Hotels subgroup that saw modest decline.

Nepal Reinsurance Company Ltd witnessed the highest turnover of Rs 216 million. Neco Insurance Company Ltd and Nepal Life Insurance Company Ltd followed with turnovers of Rs 130 million and Rs 122 million. Global IME Bank Ltd, Shivam Cements Ltd and Prabhu Insurance Company Ltd were among other actively traded stocks.

Gains were led by shares of Corporate Development Bank Ltd whose share price shot up by almost 7 percent. Khani Khola Hydropower Company Ltd, similarly, surged 6.25 percent. RMDC Laghubitta Bittiya Sanstha Ltd, Ghalemdi Hydro Ltd and Ganapati Microfinance Bittiya Sanstha Ltd closed over 5 percent higher each. Other top advances include RSDC Laghubitta Bittiya Sanstha Ltd, Sagarmatha Insurance Company Ltd and Nepal Finance Ltd, all of which registered gains of over 4 percent each.

Meanwhile, Chhyangdi Hydropower Ltd fell 2.25 percent while Shree Investment and Finance Company Ltd dropped 2 percent. Progressive Finance Ltd and Multipurpose Finance Ltd’s shares also struggled and closed down by 1.85 percent each. Besides, few energy stocks registered losses of over 1 percent each.

On the technical front, the index has formed a relatively strong bullish candlestick with a sharp increase in volume. Consequently, the index rallied through its short term trend line resistance and now rests at a crucial 1,430-point mark which is the upper limit of the recent trading range. While some correction can be expected at the current zone, another breach above this level can see the index make further upward movement towards 1,470 to 1,500’s level. Technical indicators also suggest bulls gaining control in the current juncture. Meanwhile, immediate support can be taken as 1,380-1390 points’ level.

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)



Leave A Comment