Daily Market Commentary

Stocks tumble further despite upbeat Q2 earning reports

Published On: February 4, 2019 08:52 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU: Stocks struggled throughout the session on the first trading day of the week. After trading flat initially, the benchmark Nepal Stock Exchange (Nepse) index witnessed a steady decline till the end, losing 8.57 points to close the day at 1,153.06 points.

The local bourse has failed to find any foothold in the current scenario, leading to gradual decline over the past few weeks. Earnings growth among most of the listed companies have failed to provide any impetus to the secondary market as the interest rates still trend around the higher side of the spectrum. Despite slight increment in daily turnover, the overall market activity has remained relatively low over the recent few sessions. Shares worth Rs 415 million exchanged hands on Sunday.

Most of the traded sectors followed the broader market. Only Trading sub-index managed to close higher with a gain of 1.13 percent. Biggest loss came from 'Others' and Hydropower stocks with their respective sub-indices going down by 1.65 percent and 1.48 percent, respectively. Hotels stocks also saw weakness as the group's sub-index fell by 1 percent. Similarly, Manufacturing & Processing, Non-life Insurance and Life Insurance sub-indices also lost 0.91 percent, 0.65 percent and 0.62 percent, respectively. 

In terms of market participation, Machhapuchhre Bank Ltd Promoters Share witnessed the highest turnover of over Rs 59 million. Shares of Nepal Telecom Ltd followed suit with Rs 35 million worth of transactions. Next on the list were, Upper Tamakoshi Hydropower Ltd and Nabil Bank Ltd Promoter Shares with turnovers of Rs 25 million and Rs 24 million, respectively. Chhimek Laghubitta Bikas Bank Ltd, Nepal Bank Ltd and NMB Bank Ltd were the other companies logging top turnovers.

Among gainers, shares of Vijaya Laghubitta Bittiya Sanstha Ltd posted the highest percentage gain of 3.83 percent after the microfinance company earnings almost doubled to Rs 24.24 million in the second quarter of FY2018/19 compared to Rs 12.39 in the same quarter of previous year. Other microfinance scrips followed suit as Janautthan Samudayik Laghubitta Bikas Bank Ltd, Suryodaya Laghubitta Bittiya Sanstha Ltd and Kalika Laghubitta Bittiya Sanstha Ltd posted gains of 2 percent each. Similarly, Everest Insurance Company Ltd, Bishal Bazar Company Ltd and Tinau Development Bank Ltd were the other top gainers of the day.

Conversely, mutual fund units of Sanima Equity Fund tumbled by 3.79 percent. Similarly, share price of Arambha Microfinance Bittiya Sanstha fell by over 3 percent. Other top losing scrips include Arun Valley Hydropower Development Co Ltd, Mahalaxmi Bikas Bank Ltd, Arun Kabeli Power Ltd and Himalayan Power Partner Ltd with declines of over 2 percent each.

On announcement front, Prabhu Bank Ltd amended its dividend announcement, announcing its shareholders 8 percent bonus shares and 0.42 percent cash dividend (for tax purpose). The decision comes after the commercial bank was required to add Rs 170 million to its regulatory reserve as per the direction of the Nepal Rastra Bank (NRB). On the earnings space, Nepal Bank Ltd reported a modest 1.41 percent growth in its net profit as per its quarterly financials. Its earnings stand at Rs 1,661 million. Meanwhile, Chhimek Laghubitta Bittiya Sanstha Ltd and Nirdhan Utthan Bikas Bank Ltd saw their respective net profits increase by over 81 percent and over 23 percent, respectively.

ARKS technical analysis indicates a bearish candlestick formation on a daily timeframe as the index hit its new low since the beginning of 2019. With the index breaching the support of 1,160 points and technical indicators suggesting faltering momentum, further downfall seems likely for the short run. Nonetheless, the immediate support lies in range of 1,140-1,120 points, from where a bounce back can be expected.

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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