Weekly Technical Analysis and market summary of NEPSE index; NMB microfinance is up by Rs 249 this week

A brief summary of week’s NEPSE index movement:  The index was volatile throughout the week and on the first trading day the market was up by more than 1% in the first few hours but eventually ends in the red zone by losing minimal points. On Monday the market fell throughout the day and on Tuesday and Wednesday the index consolidated but we have witnessed big upward movement on those days.Yesterday, the market was totally bearish and ends by losing double-digit points. The mixed review of bankers and investors on the monetary policy brought volatility into the market.

The indicators we have used here are Candlestick Pattern, volume chart, Relative Strength Index (RSI), Exponential moving averages (EMA), Bollinger bands and MACD for the prediction. The chart we have used here is a candle-stick pattern of one day time period

Candlestick Pattern:  No special pattern was observed on the daily and weekly candlestick pattern.

EMA: Exponential Moving Average is used to predict continuation as well as the reversal of the trend. As shown in the chart below, we have used three major EMA’s of 5 days (red line), 20 days (green line), and 180days (black line) period.

The index is trading below these three major EMAs that means the short-term trend, the mid-term trend and the long-term trend is bearish. As long as the 180 days moving average stands above the NEPSE index, market will remain bearish.

Bollinger Band: Bollinger band is shown below with NEPSE index main chart. It is used to predict volatility as well as the continuation of the market trend. Bollinger band is consisting of three lines viz. upper band (blue, on the upper side), lower band (blue, on the lower side) and middle line (red, on the center).

When the space between an upper band and lower band will increase the volatility will increase and vice-versa. As we can observe from the above chart that the space between those two bands are decreasing since few weeks which is signifying that the volatility will decrease and as the NEPSE index is trading below the middle line (20 days simple moving average) the overall market trend is still bearish.

Volume: Volume chart is shown below with the NEPSE index main chart. 

Though the market was bearish this week, the volume was comparatively high prior to average volume of last one months. This expresses that, the investors are buying stock in large quantity. In Nepalese stock market, the increasing volume supports an uptrend.

Relative Strength Index (RSI): The RSI chart with NEPSE index main chart is shown below. Relative Strength Index is used to indicate a over-bought (too high price) and over-sold (too low price) price of the stock and divergence in the price and RSI line. The over-sold position is taken at 30 level and over-bought position is taken at 70 level.

The purple line above is the RSI line and the blue line above and below the RSI line shows the over-bought position of 70 and the over-sold position of 30. Currently, the RSI is at 36 level, near the oversold level of 30 and no divergence was observed. Hence from the RSI indicator, no strong signal was observed.

MACD: Chart below shows the Moving Average Convergence & Divergence with the NEPSE index main chart. MACD is used to predict the market trend. 

When the MACD line stands below the neutral zero level the overall market trend will be bearish and when the MACD goes to the positive zone then the overall market trend will be upward.

As we can observe, MACD line (red line) is negative which means that the overall trend is downward. The positive aspect of the MACD indicator is that the signal line (blue dotted line) is below the MACD line which expresses that market trend could reverse.

Conclusion: The strong signal was not observed this week, though a couple of indicators are supporting the short-term uptrend. The index was trading in the range of 1250-1175 level in last one month thus this upper and lower level of this range can act as the resistance and support. Another important thing is that the index is now trading below the psychological level of 1200.

Prediction

Bear are strong in the market however we could see some retracement next week.

Support and resistence level

The strong support for the NEPSE index is still in the range of 1170-1130 points and major resistance is in the range of 1244-1285 further the psychological level of 1200 can also act as the resistance.

Support and Resistance according to week’s Pivot points

The pivot point for this week is 1207

1st Resistance-1225 points          1st Support -1174 points        

2nd Resistance-1258 points         2nd Support -1156 points

This week’s market statics

Total Turnover- Rs 2.11 arba

Total traded shares – 61.12 lakhs

Total transaction- 24370

The turnover has increased by more than 50% compared to last week’s turnover.

Open- 1224 points                Closed- 1192 points

High – 1241 points               low- 1190 points

This week’s market summary in Tabular form.

Movement of Indices and Sub-indices.

Top ten gainers and losers of the week.

(Swarojgar Laghubitta’s and National life insurance’s stock price had been adjusted for 100% and 60% right issue)

Top ten Companies with highest turnover, transaction and traded shares.

Top buyers and sellers broker of the week.