Daily market commentary

Stocks surge as investors eye scrips of BFIs

Published On: January 16, 2020 08:31 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Nepal Stock Exchange (Nepse) index posted gain in the morning session on Wednesday, but pulled back roughly to its opening level by mid-session. However, following a considerable buying pressure seen mainly in bank and financial institutions (BFIs), the latter half of the day was marked by a notable rally. At the close, the index added 20.85 points, or 1.65%, to settle at 1,284.23 points.

After taking a breather on Tuesday, the index stretched its rally further hitting a seven-month high. Bulls remain in significant control as the secondary market has shown no signs of exhaustion since the beginning of December. With other sectors already at some of the highest levels, investors are now flocking towards financial sector scrips. Hence, the surge will likely gather further momentum in the coming sessions. Active trading was witnessed on the day with the exchange recording a turnover of Rs 905 million.

On sectoral front, Trading sub-index led the day's gain as it expanded by 8.18% gain. Finance, Banking, Development Bank, Microfinance and Life insurance sub-indices also saw substantial strength with their respective sub-indices adding 3.25%, 2.43%, 2.08%, 1.38% and 1.27%, respectively. Hydropower, Non-life Insurance and Mutual Fund sub-indices also ended the day in positive territory. On the other hand, Manufacturing & Processing, Hotels and 'Others' sub-indices saw minor corrections of 0.66%, 0.18% and 0.12%, respectively.

Commercial bank led the list of active stocks. Shares of NIC Asia Bank Ltd, NMB Bank Ltd and Nepal Bank Ltd were high in demand as Rs 74 million, Rs 31 million and Rs 29 million worth of shares were traded respectively. Similarly, Rs 20 million worth of shares each of Citizen Investment Trust, Nepal Life Insurance Company Ltd, Deprosc Laghubitta Bittiya Sanstha Ltd, Everest Bank Ltd were traded on the day. Civil Bank Ltd, Prabhu Bank Ltd and Nepal Credit and Commerce Bank Ltd were the other active stocks of the day.

Among gainers, seven companies saw their respective share prices surge by almost 10%. They include Bishal Bazar Company Ltd, Reliance Finance Ltd, Infinity Laghubitta Bittiya Sanstha Ltd, Mahila Sahayatra Microfinance Bittiya Sanstha Ltd, Panchthar Power Company Ltd, Panchakanya Mai Hydropower Ltd, and Manjushree Finance Ltd. Deva Bikas Bank Ltd, Vijaya Laghubitta Bittiya Sanstha Ltd and Salt Trading Corporation also saw their respective share prices advance by 8.39%, 7.91% and 7.71%.

Conversely, Rairang Hydropower Development Company Ltd struggled the most and as reflected by a drop of 7.27% in its share price. Central Finance Company Ltd, Shivam Cements Ltd and Sanima Bank Ltd Debenture 2085 posted losses of over 2% each. Furthermore, share prices of Dibyashwori Hydropower Ltd, Karnali Development Bank Ltd, Life Insurance Company Ltd, Nepal Seva Laghubitta Bittiya Sanstha Ltd, Siddhartha insurance Company Ltd, and Chilime Hydropower Company Ltd were also down by over 1% each.

ARKS technical analysis indicates the market forming a bullish engulfing candlestick erasing all of the previous session's losses. Consequently, the benchmark index managed to close above 1,280-point mark. Given the index holds ground above this level, the respective resistance can act as a support for the market on its way higher. Momentum indicators also signal possibility of further advance in the bourse.

This column is produced by ARKS Capital Advisors Ltd
(Views expressed are those of the producer and do not necessarily reflect those of this publication)

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