Weekly Commentary: Nepse posts losses in the final week of first quarter

Published On: October 17, 2020 02:19 PM NPT By: Republica  | @RepublicaNepal

Nepse benchmark index falls 27.18 points to close the week at 1,562.46 points

KATHMANDU, Oct 17: Local stocks kicked off this week’s trading on a feeble note. The Nepal Stock Exchange (Nepse) benchmark index dropped 13.36 points on Sunday. While the bourse tried to gain some footing on Monday with 1.74 points gain, weakness persisted in the latter trading days. On Tuesday, the equity index gave up 9.42 points, followed by a decline of another 7.42 points on Wednesday. Investors found some respite in the last trading day of the week as Thursday saw the benchmark close 1.29 points higher. Overall, the week’s loss tally stands at 27.18 points or 1.71% with Nepse ending at 1,562.46 points.

After two weeks of modest gains, selling pressure was evident in the equity market as investors looked to cash out their investment ahead of the holidays. Further, turnover also remained subdued with each session registering lower market participation than the preceding one. Weekly turnover fell to Rs. 9.09 billion compared to Rs. 14.53 billion in the week earlier.

Sensitive Index also fell 1.48%, reflecting weakness in Class ‘A’ stocks as well. Further, the broad dip saw all sectors finish the review period in the negative territory. Hydropower and Manufacturing & Processing stocks were the biggest losing groups. The respective sub-indices fell 5.11% and 3.37%. Hotels, Finance and Non-Life Insurance stocks also corrected sharply with declines of 3.07%, 2.57% and 2.45% on average. All other sectors suffered in the week. Heavyweight banks were down 1.38%.

The largest Class ‘B’ financial institution in terms of market capitalization, Muktinath Bikas Bank Ltd, led the list of top turnover stocks of the week. Nearly Rs 310 million worth of the development bank’s shares changed hands. Arun Kabeli Power Ltd and Nepal Reinsurance Company Ltd closely followed with turnovers of Rs 307 million and Rs 301 million. Arun Valley Hydropower Development Co. Ltd and Nepal Life Insurance Co. Ltd registered transactions of Rs 292 million and Rs 269 million. Jyoti Bikas Bank Ltd, Nepal Bank Ltd and Api Power Company Ltd were among other actives.

On Friday, the issue manager of Sanima General Insurance Ltd’s Initial Public Offering (IPO) shares allotted the stocks to applicants from general public group on lottery basis. Only 273,000 out of the total 863,545 applicants were allotted 10 shares each worth Rs 273 million.

ARKS technical analysis indicates the index forming a weekly bearish candlestick erasing two weeks of gains. Hence, sellers have remained dominant throughout the week pulling the index back from its post lockdown intraday high of 1,615 point’s mark. Some correction or consolidation is highly likely given the possibility of lackluster trading until the beginning of festive holidays. Nonetheless, given the market maintains its footing above its support zone at 1,540 – 1,550 level in the upcoming sessions, the Nepalese market could have more legs to the upside.

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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