Weekly Commentary: Stocks soar to record high

Published On: November 28, 2020 03:23 PM NPT By: Republica  | @RepublicaNepal

Nepse benchmark index jumps 115.13 points

KATHMANDU, Nov 28: Stocks began week on high optimism as the Nepal Stock Exchange (Nepse) index rallied over 36 points on Sunday. The rally eased on Monday with a modest 4.68 points advance followed by a small 2.38 points’ correction on Tuesday. Nonetheless, the latter half of the week notched gains of 29.68 points and 18.43 points on Wednesday and Thursday. The upbeat week saw the major average add 115.13 points or 6.47% to finish at 1,893.25 points. Class ‘A’ stocks also jumped on par with the Nepse index as the Sensitive Index posted a gain of 6.44%.

The review period’s surge marks a third straight week of advance where the local stock market saw substantial gains. While highly volatile stocks drove the earlier rise from 1,600 points mark, heavyweight banks and few other sectors mainly supported the surge in the latter part of November. With investors tagging the current rally as the end of the bear run into a new era of uptrend, turnover also jumped sharply. Weekly turnover stood at a record amount of Rs 31.54 billion.

Despite the advance in the broader market, few sectors corrected towards the end of the week. Hotels segment suffered the most and sank 4.12%. Life Insurance sector also fell towards the end of the week with a 1.41% dip. Mutual Fund sub-index closed 0.93% lower. On the gainers side, Manufacturing & Processing sub-indices shot up by 14.93% and ‘Others’ sector rallied 11.48%. Heavyweight banks played a major role in this week’s rally as the respective sub-index surged 8.70%. All other sectors saw notable gains in the week.

Nepal Reinsurance Company Ltd’s shares were heavily traded in the week. Over Rs 2 billion worth of the shares changed hands. Nepal Telecom Ltd and Nepal Bank Ltd were the other actively traded scrips with turnovers of Rs 1.3 billion and Rs 1.2 billion, respectively. Nepal Life Insurance Company Ltd, Himalayan Distillery Ltd, NIC Asia Bank Ltd and Nabil Bank Ltd also registered transactions of over Rs 1 billion each.

As per ARKS weekly technical analysis, the market formed a strong bullish candlestick on the weekly timeframe suggesting the momentum favoring bulls in the present context. Further, with banking stocks leading the Nepse index this week, the market is most likely to stretch its uptrend further. Besides, with weekly RSI and MACD indicators pointing upwards, the overall trend remains bullish in the present context. However, impending correction in few other sectors might point towards a possibility of short-term retracement.

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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