This Week’s NEPSE Summary
NEPSE Index closed lower this week then the week before. This week, the index has decreased to 1844.14 points. Last week NEPSE had closed at 1870.63 points. There is a 1.42% decrease from last week’s closing. Overall the market has been seemingly stagnant, and between 1900-1800 range for a while now. Oh Thursday(20th October, 2022) the market turnover was at Rs.507 million & the market capitalization was at NPR.2.65 trillion.
As suggested earlier, NEPSE is quite stagnant, for the last few weeks. This week also , it stayed quite less volatile. There was a bearish move of negative 26.49 index points this week. NEPSE index opened at 1871.09 points, and closed at 1844.14 points this week. The turnover and volume stayed lower than the last traded week indicating less activity and momentum, probably because of approaching Tihar festivals too.
Technical Pattern Analysis
This week, even though there was less volatility in the market, NEPSE closed slightly lower. The volatility is decreasing in the market showing decreasing momentum of the bearish move. This week there the trading volume has decreased. This implies that there is fading bearish momentum. Likewise, RSI is exhibiting a bullish divergence.
NEPSE had formed a head and shoulder pattern has tested the starting point of the pattern around 1804 points. This head and shoulder usually represents the reversal of a bullish trend, so I recommend to be very cautious with the trades
After NEPSE broke the important technical support level of 1900-1910 and 1886, there existed a high probability of at least 100 points further fall. As expected from the technical perspective, the market could test the 1800 level.
The next immediate support level seems to be 1806. The other important support level for the midterm is 1661.
We believe the market can dwindle further downward in the next week to touch the support level of 1800.
However, from RSI divergence and low volatility observed this week, could mean some cool-off can be expected. The market can be positive after the 1800 level, the trades can be taken at the 1800 level but with a stop loss level.
Short Term Opinion
The NEPSE has formed a head and shoulder pattern and the nearest the technical target is the starting point of the pattern in 1804.
At the current uncertain time, investing in companies with good core revenue growth and EPS, low PE stock through dollar cost-averaging method, and allocating some portion into fixed return assets like short-term Fixed Deposits / Fixed Return Asset management would be advisable.
You can find some of the best companies to invest in here:
Top 3 Companies in NEPSE
Top 10 Dividend Paying Companies in NEPSE
Long Term Opinion
Looking at the market scenarios and the economic conditions in Nepal, the market can continue to go sideways, or go down even further. The market turning bullish in the upcoming weeks seem highly unlikely. So how do you trade in such scenarios?
One simple answer. Do what is tried, tested and will be beneficial in the long run. Right now what are those options:
- Buy Companies with low P/E, high dividends and a solid history:
Top 5 Undervalued Companies in NEPSE - Buy Mutual Funds:
Best Mutual Funds in Nepal - Use SIP(Systematic Investment Plan):
SIP Guide in Nepal - Put Money in Bank FD and Fixed Interest Instruments:
Highest Fixed Deposit in Banks
Technical Entry Ideas
The chart and technical analysis of Miteri Development bank shows strong bullish movement soon.
It has high volatility of 3.10% as compared to the market, this shows that people are actively buying and selling the stock which is necessary for a down or uptrend. It as increased 2.17% in the last trading day showing above average market growth.
The MACD vs Signal line suggest a bullish momentum.
NOTE: This is just a basic idea on how to select shares for buying. This is not to be treaded as a financial advise. Do you own due diligence before buying or selling any stock.
Conclusion
The market had very low volatility this week. Due to the continuous drop in NEPSE index over the last months and high interest rates provided by the banks, the market in seems to go sideways, but it can go even further. For casual traders, trading is not suggested and this moment. A wiser choice would be to utilized the high fixed interest by banks and various capitals. The coming few weeks after Tihar will be crucial in figuring our which direction the market will go.
May your prosper, and the blessing of the almighty be with you and your family! Happy Tihar!!