Laxmi Capital News
Nepse ends week lower despite pre-budget surge

After declining on the first trading dayof the week, stocks staged a comeback on the second day as the benchmark indexsurged more than 35 points on the day. However, despite much anticipation,announcement of government budget failed to uphold market sentiments throughoutthe latter sessions. 

 Eventually, the market pared shortterm gains as Nepal Stock Exchange (Nepse) Index closed the week 0.8 percentlower at 1307.66 points. Class 'A' stocks also followed the broader market withthe Sensitive Index dipping 0.94 percent to 275.28 points.

 The weekly turnover showed ameager improvement as total transactions amounted to Rs. 2,087 million comparedto last week's Rs. 1,922 million. However, market activity persists to stay onthe lower side as investors were still in a state of indecision even after thefederal budget announcement on Tuesday. 

 With regards to the capitalmarket, dismissal of any Value Added Tax (VAT) on broker's service charge wasthe main positive takeaway from the budget. Furthermore, as per the budget, itwill also be mandatory for any real sector company with a capital of over Rs. 1billion to convert itself to public company and have its shares listed in thestock exchange. However, the Capital Gains Tax (CGT) in the secondary markettransactions for individuals has been increased to 7.5 percent.

Major sub-indices turned in a mixedperformance in the review period. Strength was seen in the trading sector asthe Trading sub-index advanced the most closing 0.78 percent higher. Similarly,Insurance and Finance sub-indices jumped 0.75 percent and 0.64 percent,respectively. Banking sub-index saw the highest decline of 1.61 percent thisweek. Shares of Mega Bank Ltd led the losses in the banking sector as its priceslumped for four consecutive days. Hydropower sub-index also lost 1.23 percent.

 Stocks of Nepal Bank Ltd were themost active with a turnover of over Rs. 75 million. This week, the commercialbank has applied for approval of its Further Public Offering (FPO) onSecurities Board of Nepal (Sebon). 

Secondly, shares of Global IME bank Ltdthat logged in a turnover of over Rs. 72 million. Additionally, shares of SanaKisan Bikas Bank Ltd, Premier Insurance Co Ltd and Prabhu Insurance Ltd werethe other active stocks.

 In terms of major news, NepalStock Exchange (Nepse) has opened bid on Sunday for the procurement ofconsulting service to test the automated trading system which will beimplemented in the secondary market within short order. 

 As per the ARKS technical analysismodel, the stock market further stretched its losses this week. The indexfailed to cross the 1,340 mark mid-week and retraced back close to the supportof 1,300 points mark. Moreover, Relative Strength Index (RSI) and MovingAverage Convergence/ Divergence (MACD) both indicates the index losing momentumas no recent boost in the market is evident. Hence, the index is more likely totest the support of 1,300 points next week which might point out a possibledirection for the market in near future. 

Source: MyRepublica, 3rd June 2018

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