NEPSE Gained 64.35 Points This Week (Weekly Summary With Insight Into Vital Data)

Part 1: Rundown and Technical Analysis

There were only four trading days this week. The exchange was closed on Thursday on the occasion of Holi. The market is closed on Fridays and Saturdays every week. The trading session on March 14 (Monday) was insignificant as the index was halted early because of issues in the brokers' data center.

The NEPSE index closed at 2,631.25 this week after a gain of 64.35 points (2.51%). The index had closed at 2,566.90 last week with a gain of 0.78% from the week before that.

This week, the index went as high as 2,682.57 and as low as 2,575.27, hence witnessing volatility of 107.3 points. In the previous week, the index had seen volatility of 69.08 points.

Analysis of Trend

The NEPSE index is up only around 9.92% compared to the same date last year. It is down around 17% from the all-time high of 3,198.60 created around seven months ago and up around 5.18% from the most-recent pivot low.

Candlestick Charting and Volume

On the weekly candlestick chart, this week's market movement has formed an average size green candle with a long upper wick. Last week's candle was a short green candle with a long lower wick.

The index had gained 52.32 points on the last trading day in the previous week, resulting in the formation of a bullish engulfing pattern on the candlestick chart. The extended green candlestick formed on the last day had engulfed the bodies of the previous three candlesticks. Given that the extended green candle was formed with the highest intraday volume of the week, the previous weekly summary had indicated the potential of a bullish reversal.

The bullish sentiment was confirmed this week, with the index gaining a massive 101.07 points (3.94%) on the first trading day. However, the sentiment couldn't sustain for the rest of the week, and the index kept losing minimal points for the last three trading days.

Nonetheless, volume was the highest on the first trading day when the index saw a voracious gain. This leads one to conclude that the bullish sentiment dominates, and this week's market movement may be a bullish correction.

Support/ Resistance, Price Action

First and foremost, there is no rigid rule to deduce support and resistance levels from a stock/ index chart. Technical analysis is more an art rather than hard science since it is an attempt to deduce market psychology after all. As is the case with human behavior, markets are largely unpredictable, subject to whims and instance changes in sentiment. The best a chart reader can do is deduce investing strategies using what has worked historically, and what gives a competitive edge even in securities other than those present in the sample data.

The resistance level is simply the price above which the index has had trouble moving up. Thus, the previous high (or a series of highs if they are on the same level) can be used as resistance. Meanwhile, if the stock or index chart has gone below the previous low, it can also be inferred as a resistance level, since the previous support level acts as resistance if the price/ index has broken below it.

On the other hand, the support level is simply the price below which the index has had trouble moving down. Thus, the previous low (or a series of low if they are on the same level) can be used as support. Meanwhile, if the stock or index chart has gone up the previous high, it can also be inferred as a support level, since the previous resistance level acts as support if the price/ index has broken above it.

The 2,570 index level and the low of the candle formed last Thursday, i.e. the 2,499.03 level will act as immediate support.

Meanwhile, the 2,670 and the 2,760 levels are resistance levels determined by price action.

Momentum Indicators

The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or index. Traditional interpretation and usage of the RSI are that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.

The RSI reading on the daily timeframe is 45.04. The index penetrated above the 30 RSI level last week, a likely indication of a potential change in sentiment, although indicators have a lagging nature and can't be relied upon for a forecast.

Meanwhile, the RSI reading on the weekly chart is 47.11.

On the other side of things, the MACD line is still negative, i.e. below zero in the daily timeframe, with the MACD reading at -37.47. For the first time in about 2 months, the MACD line has crossed over the signal line, indicating a bullish sentiment in the timeframe. However, the crossover would have been more reliable if the MACD line was on the positive zone.

Part 2: Insight into Important Data

More than 2.28 crores unit shares worth Rs 12.14 Arba have been traded through 1.66 lakh transactions this week. The current market capitalization of NEPSE stands at Rs. 3,730,521.95 million.

NEPSE index and Sub-indices performance: (Increment based on previous week's close)

The NEPSE index increased by 2.51% this week. Hotel and Tourism increased the most this week with a 10.19% increment.

Stocks with highest monthly Beta (Hydropower, Development Bank, Finance, Life Insurance)

Himalayan Urja Bikas Company Limited (HURJA) has the highest monthly Beta value of 1.99 followed by Narayani Development Bank Limited (NABBC) and  Miteri Development Bank Limited (MDB) with 1.91 and 1.80 beta values respectively.

Top Ten Gainers of the week:  

Emerging Nepal Limited (ENL) is the top gainer of this week. ENL closed at Rs. 472.6 with Rs. 131 (38.39%) increment.

All the analysis is done with the SS Pro Software. To know more about the software, click on the link below

SSpro

Top Ten Losers of the week:

Neco Insurance Limited's (NIL) price has decreased by 9.38% and its LTP stands at Rs. 106.

Top Stocks by Turnover, Volume, and Number of Transaction:

Nepal Doorsanchar Company Limited (NTC) is the top traded company of the week. A total of Rs. 74.83 crores worth of NTC shares were traded this week.

Top Buyers Brokers of the Week:

Imperial Securities Co.Pvt.Limited (Broker No- 45) was the top buyer broker of this week and it has bought stocks worth Rs 71.97 crores.

Top 10 Bought Companies:

Top Seller Brokers of the Week:

Imperial Securities Co.Pvt.Limited (Broker No- 45) was the top seller broker for this week. The brokerage firm has sold stocks worth Rs 95.53 crores.

Top 10 Sold Companies:

All the analysis is done with the SS Pro Software. To know more about the software, click on the link below

SSpro