The local stock market observed heavy losses at the start of the week. The Nepal Stock Exchange (Nepse) index fell 17.87 points on Sunday served by a 16.18point drop on Monday considering a fresh 5-month low. Following the sharp drop, the investment market made a striking rebound mid-week recovering all its early week losses.
The benchmark index surged 26.91 points and 22.68 points on Tuesday and Wednesday, individually. However, the equity market gave up some area in the final trading day of the week with Nepse dropping 18.12 points on Thursday. Ultimately, the index closed the week with a minimal loss of 2.58 points or 0.22% at 1,155.30 points.
The stock exchange which was on a constant weakening run observed high volatilization in the week amid a struggle between buyers and sellers. While market associates left the market at the start of the week fearing more southbound movement, thoughts were raised in mid-week as investors started accumulating stocks in some of the cheapest prices. Hence, Nepse has exhibited a preparatory signal of catching persistent tumble, while some uncertainty is yet evident as shown by a late-week correction.
In the meantime, commercial banks and microfinance companies proceeded to represent their concerns. Essentially investment banks have held section following individual interest statements helping heavyweight banks to perform somewhat better than the broader market. Meanwhile, weekly turnover grew by over 20% to Rs 1,893 million.
Class ‘A’ stocks underperformed with the Sensitive Index binding 0.62% lower. In the meantime, sectors closed mixed. Trading and Manufacturing & Processing assets saw notable strength with the identical sub-indices shooting up by over 3%. Hotels sub-index also posted an important move to the upside and increased by 2%. Microfinance sub-index added 1.33%. Hydropower, Finance and Development Bank sub-indices also ended higher.
On the other hand, Mutual Fund group experienced the most as its sub-index dropped 1.36%. It was developed by ‘Others’ sub-index which fell 1.08%. Banking, Life Insurance, and Non-Life Insurance scrips also trimmed marginally lower.
In phases of market action, shares of Shivam Cements Ltd saw the highest weekly turnover. More than Rs 154 million worth of the shares exchanged hands. Finally, Siddhartha Bank Ltd posted a turnover of Rs 116 million after the bank declared 25.26% interest including 10% bonus shares and 15.26% cash pay-out. Nepal Bank Ltd, Nepal Life Insurance Co Ltd, and Prabhu Bank Ltd were also actively traded in the week.
ARKS technical report presents the index creating a small bearish candlestick on the weekly timeframe stretching its losses to 9 following weeks, its longest weekly losing streak in multiple years. Earlier, the index dropped for 8 straight weeks last year in May and June. But, the spinning top candlestick form shows the sellers losing steam and bulls remaining both active in the survey period.
Therefore, the market currently is seeing uncertainty. Given the market recognizes important gains in the coming week with raised volumes, the index can be required to make a rebound. Further, with weekly Relative Strength Index (RSI) nearing oversold area sellers might be consumed in the coming weeks making way for buyers to take over.
Therefore, investors are advised to observe the market closely in the coming week for a preceding sign of withdrawal before going long in the equity market.