Turnaround on the horizon as Share market enters oversell zone

REPUBLICA
The Nepse index (-3.10%) touched a three month low of 654.63 points on Tuesday, before closing at 660.40 points, as investors remained concerned over the supply impact of the conversion of 19% promoters´ shares. However, the current downtrend in the market is fundamentally unjustified, and the supply pressure has been overestimated.
Finance Companies were the key players in the market. Prudential Bittiya Sanstha (+Rs 37) which is closing its book for a 1:2 right issue on September 9 was the highest gainer followed by Bhajuratna Finance (+Rs 12) and Everest Finance (+Rs 28). However, the big losses of Guheshwori Merchant & Banking Finance (-Rs 139) whose shares traded for the first time since the issuance of 18% bonus shares and World Merchant Banking & Finance (-Rs 75) pulled down the Finance sub-index(-1.39%). The rest of the active sectors too traded in the red, with Commercial Banks (-4.10%) suffering the steepest decline as Bank of Kathmandu (-Rs 141) and DCBL Bank (-Rs 19) recorded the biggest losses in the sector. Development Banks (-2.50%) followed suit with Siddhartha Development Bank (-Rs 33) falling the most. Similarly, Hydropower sub-index (-2.07%) also declined because of the fall in share prices of Butwal Hydropower (-Rs 5). Although Lumbini General Insurance (+Rs 12) posted one of the highest gains of the week, the losses in the prices of the majority of the insurance companies contributed to the overall decline of the Insurance sub-index (-0.59%). Similarly, the depreciation of Nepal Telecom´s (-Rs 11) stock price dragged down the ´Others´ index (-1.78%).
Among other news, IME Financial Institution declared 1:3 right shares, and Sunrise Bank announced the distribution of its IPO. Additionally, Birgunj Finance and Goodwill Finance announced their book closure dates for 1:3.92 right (on September 7) shares and 1:1.5 right shares (on September 15) respectively. Business Development Bank also announced book closure for 1:2.1 right shares on September 14. The market attempted to recover on Wednesday by gaining 5.77 points. Technical analysis indicates that the market is currently in an oversell state and might have reached the threshold, in which case a slight uptrend can be anticipated next week. However, the strength of the uptrend remains uncertain due to regulation risks still lurking. The total turnover of the week amounted to Rs 34,54,33,241, with a 15.78% decrease in the average daily volume.