NEPSE on rising mood - Hydropower, Hotel, and Others Sectors outperformed NEPSE Index; Know which sector and Hydropower Companies rises more in the last 1 month

After more than 3 years of the long bearish cycle of NEPSE, it created a high of 1632.17 on 27 Feb 2020. During this time the world was already affected by the deadly coronavirus; some of the countries were already shut down to contain the virus. However, Nepal was hit a bit later and the government decided to announce a lockdown in the nation. This created huge panic among the investors and the market started to plunge from the high of 1632.17 to 1188.70 (-37.34%). However, the market had a major pullback from 30 June 2020 and the market is already up almost 33%.

Since the major pullback from 30 June 2020, the market has gone through crazy volatility but from 20 Aug 2020, the market seems to have grip onto a steady momentum with a huge turnover. So, for this study, we will be looking at the gains of all index and Hydropower Sub-index in specific from Aug 20, 2020, to Sep-17, 2020.

Observing the table above all the indexes are up. NEPSE was at 1397.57 points on 20 Aug 2020 before gaining the momentum and after 27 days of upward momentum, it gained 12.49% reaching 1572.18 points with an average volume of 2.28 Arba. Mutual Fund has gained a minimal point of 3.69% while the Hydropower sub-index has gained the highest of 35.65% showing that investors are drawn towards hydropower and are optimistic about the hydropower in specific.

Let’s have a look at the gains of all hydropower companies from Aug-20 to Sep-17.

Since the market gained momentum, almost all companies started to soar with the index. However, it seems that investors are highly drawn towards Arun Valley Hydropower Development Company Limited (AHPC). AHPC in specifically has gained about 93.48%. the stock was trading at Rs. 92 in Aug-20 and in 27 days’ time frame the stock traded at Rs. 178.

On the flip side, Butwal Power Company Limited (BPCL) gained the least percentage point of 17.32%. The stock traded at Rs. 420 in Sep-17, 2020.

It is interesting to observe the recent momentum because the stock market has been reacting to the current scenario in the opposite way. However, when we study past scenarios, the Nepalese stock market shows no correlation to the economic downturn rather the market moves in a cycle. Despite different uncertainties in the economy in the current scenario, people are drawn towards the stock market to hedge against different uncertainties. With not much investment opportunity in the country, investors are highly invested in the stock market which is shown by the daily turnover. However, we cannot be so sure as to why the market is reacting the way it is and we definitely cannot bet against the momentum.