Daily Commentary: Turnover falls sharply as lockdown mars market activity

Nepse benchmark up 6 points

KATHMANDU, Aug 20: Stocks traded flat in the first half an hour of trading on Thursday. The benchmark Nepal Stock Exchange (Nepse) index hovered around 1,390 points in the morning before rallying sharply above 1,400 points at mid-session. The second half, nonetheless, saw the index trim some of its earlier gains to close the day with a modest gain of 6.28 points at 1,397.57 points.

While the local bourse faced some selling pressure on Wednesday, Thursday’s session remained relatively poised. The index resisted falling below 1,390 points mark, with the trading range tightening since the beginning of August. With investors placing heavy buying orders at lower prices and sellers refusing to sell at cheaper levels, the market has found good support in the current zone. Besides, some further sideways movement can be expected on the back of uncertainties surrounding the entire economy. Turnover also dried substantially with Nepse experiencing one of its lowest volumes since the beginning of July. Only Rs 393 million worth of shares were traded.

Trading sub-index led the day’s recovery with an advance of 2.38 percent. Next, Manufacturing & Processing and Hydropower sectors closed around 0.8 percent higher each. Life Insurance, Microfinance and Non-Life Insurance sub-indices also saw some strength and rose 0.67 percent, 0.51 percent and 0.48 percent, respectively. All other segments closed the day in green, except Hotels and Mutual Fund sectors which fell marginally.

Among actives, Neco Insurance Co. Ltd saw the highest turnover of Rs 30 million. Citizen Investment Trust and Nepal Reinsurance Company Ltd’s shares were also heavily traded with turnovers of over Rs 23 million each. Nepal Bank Ltd, Shivam Cements Ltd, Nepal Life Insurance Company Ltd and NMB Bank Ltd were among other actively traded stocks.

Biggest gain came from shares of Samriddhi Finance Company Ltd, which rose 10 percent. Civil Laghubitta Bittiya Sanstha Ltd and Bishal Bazar Company Ltd followed suit with advances of over 5 percent each. Suryodaya Laghubitta Bittiya Sanstha Ltd rose 3.89 percent, Best Finance Company Ltd shot up by 3.03 percent and Sanjen Jalavidhyut Company Ltd closed 3.01percent higher.

In contrast, shares of Joshi Hydropower Development Company tumbled 6.45 percent. After a multiple-session rally, Sadhana Laghubitta Bittiya Sanstha Ltd corrected 2.99 percent. Shares of Multipurpose Finance Ltd, Mountain Hydro Nepal Ltd and Shree Investment and Finance Ltd also came under pressure closing more than 2 percent lower on Thursday.

On the technical front, the index formed a small bullish candlestick on the daily timeframe. Meanwhile, the trading range remained contained within the limits of the previous day’s candlestick suggesting uncertainty in the equity market. In the larger time frame too, the overall volatility has been subsiding notably as the index is consolidating around the 1,400-point mark. Hence, any volume-backed movement towards either side will likely be a key in identifying possible short-term movement of the index. Technical indicators also reflect absence of any major momentum in the secondary market.

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)