Published on November 15, 2016
1. TECHNICAL ANALYSIS 1. Market Summary (as of November 10, 2016) NEPSE at close last week (November 10, 2016) 1697.17 NEPSE high last week (November 7, 2016) 1749.12 Weekly Change -65.04 points (or -3.73%) Daily Volume (Avg.) NPR 71.16 crores Total Traded Amount (weekly) NPR 284.64 crores RSI 29.76 MACD Line -16.94 Signal Line -7.50 2. Nepse Figure Nepse (May 1, 2015 – November 10, 2016)
2. 3. Trend Analysis The Nepse index lost a staggering 65.04 points (or down 3.73%) last week to close at 1697.17. The index ended in the red for majority of last week. However, towards the end of the week, it gained a tiny 0.31 points to end in the green. The index has fallen further below from the 50-day moving average, indicating bearish presence in the market. It seems that interest rate hike, and India’s ban on 1000 and 500 IC notes may have caused investor sentiment to be bearish. The average volume turnover decreased to NPR 71.16 compared to 82.43 crores the week prior. 4. Resistance and Support Immediate Support 1675 Support 2 1635 Immediate Resistance 1800 Resistance 2 1880 The Nepse index broke the support level of 1730 during the beginning of last week. Currently the new support and resistance level stands at 1675 and 1800 respectively. As current environment seems unfavorable to investors, the index could further fall closer to the new support level. 5. Trend Indicator a.) MACD The MACD is a momentum oscillator formed by using two different types of moving averages, which provides specific buying or selling signals. When a MACD line crosses above the signal line, it is considered to be a positive sign and indicates a time to buy, and vice-versa. The Macd and the signal line, at the beginning of last week, stood at -6.03 and -1.50 respectively. In the course of the week, the macd line decreased by 10.91 points and signal line by 5.99 to close at -16.94 and -7.50 respectively. Both the lines have reached their lowest level since the beginning of the year. The macd indicator show bearish sentiment in the market. b.) RSI RSI is a form of leading indicator that is believed to be most effective during periods of sideways movement. Such indicators may create numerous buy and sell signals that are useful when the market is not clearly trending upwards or downwards.
3. The RSI, at the beginning of last week, stood at 41.01 points. In the course of the week, it lost 11.25 points to close at 29.76 level. The RSI has entered below the 30’s zone, which signifies over-sold condition in the market. c.) Bollinger Bands The Bollinger Band is a technical indicator that consists of a moving average (21-day) along with two trading bands above (upper band) and below it (lower band). The bands are an indication of volatility, which are represented by calculating standard deviation. The benchmark index fell below the lower bollinger band in the course of last week. Such movement indicates selling pressure in the market. The upper and lower bands are starting to diverge as well, signifying and rise in market volatility.
4. 6. Overview The Nepse index declined by 65.04 points (or down 3.73%) to close at 1697.17 last week. Nepse has dropped below the 50-day moving average, which shows bearish investor sentiment. The technical indicators also show presence of bearish run in the market. However, this could also be an opportunity for investors to buy stocks at low prices. The macd is moving below the signal line, and is hovering in the negative territory. The RSI has entered the over-sold zone, ending at 29.76 level. The bollinger bands show signs of an increase in market volatility. The new support and resistance level now stands at 1675 and 1800 respectively.