KATHMANDU, Aug 26: Weakness from the previous week carried over to Sunday's trading as the Nepal Stock Exchange (Nepse) index witnessed a steady decline for most of the session. However, a surge in the closing hour saw the index recoup most of its earlier losses. Consequently, Nepse ended the day with a modest 3.45 points decline at 1,209.62 points.
The benchmark equity index fell close to psychological 1,200 points in the afternoon but rebounded thereafter. However, overall outlook remains firmly bearish as the market, since the beginning of August, has failed to gain any significant foothold. Further, the issue of capital gain tax calculation is yet to be officially addressed by Securities Board of Nepal (Sebon) which has also been contributing to investor skepticism.
Meanwhile, few microfinance has begun announcing dividends for the year. Hence, investors will likely have a close eye on impending dividend announcements by heavyweight banks before taking any major positions in the secondary market. Another bland trading session was observed as the bourse posted a turnover of Rs 350 million.
Most of the traded sectors followed the broader market and closed in the red. Only Manufacturing & Processing and Hotels sub-indices edged higher. Losses came mainly from Hydropower scrips as the group's sub-index tanked 1.45 percent. Life Insurance, Trading and Non-Life Insurance sub-indices followed with losses of 0.9 percent, 0.73 percent and 0.66 percent, respectively. Banking sub-index also closed a fraction lower. All other sub-indices fell marginally.
In terms of actives, Chhimek Laghubitta Bittiya Sanstha Ltd Promoter Share registered the biggest turnover of over Rs 32 million. Shares of Nepal Bank Ltd were also actively traded. Over Rs 24 million worth of the commercial bank's shares changed hands.
National Life Insurance Company Ltd, Nepal Investment Bank Ltd and NIC Asia Bank Ltd logged in turnovers of Rs 19 million, Rs 15 million and Rs 14 million.
Shrijana Finance Ltd turned in the best performance of the day with the stock rallying over 4 percent. Support Microfinance Bittiya Sanstha Ltd, Sindhu Bikash Bank Ltd and Swarojgar Laghu Bitta Bikas Bank Ltd's shares also saw significant strength and posted gains of over 3 percent apiece.
Other gaining scrips include Gurans Laghubitta Bittiya Sanstha Ltd, Bottlers Nepal (Terai) Ltd and Janautthan Samudayic Laghubitta Bikas Bank Ltd.
Conversely, Panchthar Power Company Ltd saw a significant slump in its price. The scrip tumbled over 7 percent. Universal Power Company Ltd sank almost 5 percent, while IME General Insurance Ltd fell 3.56 percent.
Other energy stocks followed suit as National Hydropower Company Ltd, Khanikhola Hydropower Co. Ltd and Dibyashwori Hydropower Ltd saw their respective prices slump over 3 percent each.
In the news, three micro sector lenders announced dividends for the year Fiscal 2017/18. Mirmire Laghubitta Bittiya Sanstha Ltd and Suryodaya Laghubitta Bittiya Sanstha Ltd proposed 45 percent and 44.78 percent bonus shares to the respective shareholders on Sunday.
Similarly, shareholders of Swarojgar Laghubitta Bikas Bank Ltd will be entitled to receive 26.75 percent stock dividends. The dividend proposals, however, are subject to approval from the corresponding Annual General Meetings (AGMs).
ARKS technical analysis indicates the market rebounding from 1,200 points in intraday trading. Consequently, the index has formed a hammer candlestick pattern which, if followed by a bullish candlestick, will indicate a reversal from the current downtrend. Hence, the movement of the index around 1,200 points will be crucial in determining the plausible course of the equity market.
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)