Daily market commentary

Stocks tumble for second consecutive day

Published On: July 29, 2019 05:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 29: Nepalese equities witnessed a notable slump in the beginning trading hour on Sunday. The Nepal Stock Exchange (Nepse) index fell more than 10 points initially but found some ground at mid-day. However, the secondary market continued to remain under pressure till the session's close. Nepse posted a loss of 17.11 points to settle at 1,252.80 points.

Following the broad downfall on the day, the equity index closed in the red for a second consecutive session. Subsequently, the index has fell to its lowest level since the beginning of fiscal year on July 17. Investors taking a more defensive approach towards the monetary policy has led to a substantial selling pressure in the bourse despite major listed companies posting upbeat earning results. Moderate activity was witnessed in the day as Rs. 492 million worth of scrips changed hands.

All major sub-indices closed lower barring Mutual Fund sub-index. Non-Life Insurance, Microfinance and Life Insurance segments were the major laggards. The respective sub-indices fell 1.96 %, 1.86 % and 1.79 %. Similarly, sub-indices of Banking, 'Others' and Hydropower stocks shed over 1 % each. Besides, all other sub-indices closed the day in red.

Government banks led the list of top turnover scrips. Agriculture Development Bank Ltd and Nepal Bank Ltd both registered turnovers of over Rs. 40 million. Next, Chhimek Laghubitta Bikas Bank Ltd posted a total turnover of RS. 24 million, while NIC Asia Bank Ltd saw total transaction worth RS. 21 million. Shares of Shivam Cements Ltd and Prabhu Bank Ltd followed suit with turnovers of over Rs. 20 million each.

Shrijana Finance Ltd witnessed considerable strength as its share price surged to hit the upper circuit of positive 10 %. Universal Power Company Ltd also closed 4.60 % higher. Mutual Fund units sponsored by NMB Capital Ltd – NMB Sulav Investment Fund-1 and NMB Hybrid Fund L-1 both rose over 3 % on the news of dividends for the year 18/19. While the former is paying out 15 % dividend, the latter's unit holders are entitled to 10 % payout. Infinity Laghubitta Bittiya Sanstha Ltd, Excel Development Bank Ltd and Bottlers Nepal (Terai) Ltd were among other advances.

On the other hand, Union Hydropower Ltd was the worst performer of the day in the secondary market. Its share price tanked over 8 %. Shares of United Insurance Co. Ltd also suffered and fell over 6 %. The insurer is set to issue 240 % right shares with book closure date seton July 30. Other losing scrips include Panchthar Power Company Ltd, Global IME Laghubitta Bittiya Sanstha Ltd and Laxmi Laghubitta Bittiya Sanstha registering declines of over 5 % apiece.

Sanima Bank Ltd published its fourth quarterly financials reporting a 32 % year-on-year growth in its net profit to Rs. 2,243 million. The increment is mainly attributable to a decent growth in its net interest income. Similarly, recently listed Nepal Agro Laghubitta Bittiya Sanstha Ltd and Sparsha Laghubitta Bittiya Sanstha Ltd saw significant improvement in their performance in terms of their earnings. Both micro finance's net profit stands at over Rs. 15 million as per their respective quarter reports.

As per the ARKS technical analysis, the market formed a bearish candlestick for a second day in a row. With the decline, the index has now reverted back to crucial 1,250 points mark. Hence, the movement of the index in the current zone is vital in determining the possible direction of the index. However, if the index breaches 1,240 points level, further downfall can be expected in the coming sessions.

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)


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