Daily market commentary

Stocks witness modest correction after Sunday’s rally

Published On: January 5, 2021 06:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Jan 5: The local equity market opened Monday’s session firmly higher with most of the companies extending previous day gains. However, the benchmark Nepal Stock Exchange (Nepse) index gave up some of its earlier advance within the first trading hour. Though the index traded in positive territory for most of the afternoon, selling pressure in the final minutes pushed the index in red. At the close Nepse ended at 2,169.04 – down 6.36 points against Sunday’s close.

Monday’s decline also marks the end of a five-day gaining streak in the equity market. The market, which climbed to a fresh high in the prior session, came under slight pressure amidst profit booking seen in banking and other major sectors. Some selling pressure can also be attributed to approaching quarter end where tax and interest payments will be due. Turnover fell slightly against the day earlier. Rs. 5.96 billion worth of shares were traded in the day compared to a turnover of Rs. 6.34 billion on Sunday.

Sectors ended mixed as Sunday’s trading reflected some indecisiveness. Finance, ‘Others’ and Non-Life Insurance sectors finished in green with gains of 0.64%, 0.55% and 0.54%. Development Bank and Hydropower sub-indices also inched higher. On the other hand, Manufacturing & Processing segment struggled with the group’s sub-index falling 1.76%. Banking and Life Insurance sub-indices followed suit with losses of 0.68% and 0.54%. Trading, Microfinance and Hotels sub-indices registered marginal declines.

Nepal Reinsurance Company Ltd was the most actively traded stock of the day. Over Rs. 460 million worth of the reinsurer’s shares changed hands. Nepal Life Insurance Company Ltd and Nepal Telecom Ltd followed suit with turnovers of Rs. 407 million and Rs. 378 million. Shikhar Insurance Company Ltd, Nepal Credit and Commerce Bank Ltd and Himalayan Distillery Ltd were among other top turnover stocks.

Janaki Finance Ltd and Kisan Laghubitta Bittiya Sanstha Ltd led the list of gaining scrips. Both stocks surged to hit the upper circuit of positive 10%. Narayani Development Bank Ltd’s shares rallied 8%. Radhi Bidyut Company Ltd and Shikhar Insurance Company Ltd jumped 5%. Sanima Mai Hydropower Ltd, United Insurance Company Ltd and Mirmire Microfinance Development Bank Ltd closed over 4% higher each.

Conversely, National Microfinance Bittiya Sanstha Ltd’s shares suffered the most. The micro sector lender tanked 5.84%. Nepal Finance Ltd, Everest Bank Ltd and Multipurpose Finance Company Ltd registered losses of over 3% each. Gurans Laghubitta Bittiya Sanstha Ltd, Liberty Energy Company Ltd and Vijaya Laghubitta Bittiya Sanstha Ltd were the other major losing scrips.

On the ARKS technical front, the market formed a bearish candlestick on the daily timeframe reflecting profit booking after 5-day rally. Following the breakout above the 2,100 mark, the momentum has lost some steam making some correction likely in the coming sessions. However, given the market holds ground above 2,100 mark, the uptrend will likely stretch further. Momentum indicators also suggest that buyers are dominant in the present context.

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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