Daily Commentary: Nepse extends gains to close near 1,300 points

KATHMANDU, July 6: Stocks traded flat in the first trading hour on Monday. Nonetheless, the Nepal Stock Exchange (Nepse) index witnessed a steady surge after midday adding more than 20 points. The benchmark plateaued somewhat in the afternoon until a final hour advance drove the market over 33.27 points higher. Nepse closed Monday’s trading at 1,298.73 points.

With gains coming in from two straight sessions, the index pared most of its losses that came on Thursday when it tanked six percent. The market seems to have found a somewhat stable ground with volatility subsiding in the recent sessions. Further, turnover has also remained upbeat in the last couple of days with around Rs 1 billion worth of securities traded daily. The exchange witnessed a turnover of Rs 927 million in the session.

All sectors moved in tandem with the broad based index, barring Mutual Fund sub-group which closed marginally lower. The Hotels sector led the gains as selling pressure eased off among hotel stocks after a continuous slump since March. Hotels sub-index jumped 5.51 percent. Similarly, Non-Life Insurance stocks added five percent. ‘Others’ and Microfinance stocks also saw considerable strength as both segments closed over four percent higher each. All other indices saw moderate gains.

Shares of Nepal Reinsurance Company Ltd continued to experience heavy transaction. More than Rs. 145 million worth of the stock changed hands. Next, Nepal Life Insurance Company Ltd posted a turnover of Rs 78 million, while Prabhu Bank Ltd Promoter Share saw a total transaction of Rs 48 million. Himalayan Distillery Ltd, NMB Bank Ltd and Shivam Cements Ltd were among other actives with turnovers of Rs 31 million, Rs 26 million and Rs 25 million, respectively.

Shares of Global IME Laghubitta Bittiya Sanstha Ltd and Nepal Reinsurance Company Ltd turned in the best performance of the day as both rallied exactly 10 percent. Other microfinance stocks also saw notable strength as Suryodaya Laghubitta Bittiya Sanstha Ltd and Grameen Bikas Laghubitta Bittiya Sanstha Ltd also closed almost 10 percent higher. Correspondingly, United Insurance Company Ltd, Swadeshi Laghubitta Bittiya Sanstha Ltd, Siddhartha Insurance Company Ltd and Asha Laghubitta Bittiya Sanstha Ltd were among other major gainers.

On the other hand, shareholders of Radhi Bidyut Company Ltd suffered the biggest loss as the energy scrip tanked to hit the lower circuit of negative 10 percent. Bottlers Nepal Terai Ltd and Deva Bikas Bank Ltd’s shares also came under considerable pressure as both fell over five percent. Joshi Hydropower Development Company Ltd, Bishal Bazar Company Ltd and Khanikhola Hydropower Co. Ltd declined over three percent each.

On the technical front, the two days rebound from support of 1,250-1260 mark saw the index reach the psychological level of 1,300 points. Hence, the aforementioned level will likely be tested in the next session, where the index might suggest its possible course for the short term. A breach of the resistance with notable volume can see the index make further strides toward upside where it might face the resistance at around 1,360 points mark. Technical indicators currently suggest slightly bullish momentum prevailing 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)