WEEKLY MARKET ANALYSIS WEEK 16 VOLUME 1 / ISSUE 7

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Mervin Lane
5 years ago
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WEEKLY MARKET ANALYSIS WEEK 16 VOLUME 1 / ISSUE 7 MOVING AVERAGE CONVERGENCE DIVERGENCE () Based on 5 day and 20 days moving average: following are the indications, Buy Indication No stock Sell

1 WEEKLY MARKET ANALYSIS WEEK 16 VOLUME 1 / ISSUE 7 MOVING AVERAGE CONVERGENCE DIVERGENCE () Based on 5 day and 20 days moving average: following are the indications, Buy Indication No stock Sell Indication Citizen Investment Trust Citizen Bank International First Micro Finance Development Bank. Himalayan General Insurance Co. Jyoti Bikas Bank Limited Nadep Laghubitta Bittiya Sanstha. Nepal Bangladesh Bank NagBeli LaghuBitta Bikas Bank. Nepal Bank Limited Nepal Investment Bank NMB Hybrid Fund L-1 Rastriya Beema Company Shangrila Development Bank. Sindhu Bikash Bank Swabalamban Bikas Bank Taragaon Regency Hotel 1. ANALYSIS OF VARIOUS INDEX 28/10/2018 Indices Turnover Current Points Change %Change NEPSE 305,220,000 1, (13.62) -1.10% Sensitive 276,265, (3.05) -1.16% Float 305,220, (1.14) -1.26% Sen. Float 276,265, (1.07) -1.29% Banking 201,701,000 1, (15.91) -1.44% Trading Hotels 1,151,320 1, % Development 12,783,200 1, (10.17) -0.68% Bank Hydropower 26,492,800 1, (9.19) -0.68% Finance 4,346, (6.81) -1.10% Non-Life Ins 18,846,700 5, (79.73) -1.40% Manu.& Pro. 1,856,240 2, (3.72) -0.16% Others 5,957, (1.41) -0.19% Microfinance 18,331,500 1, (14.73) -1.00% Life Ins. 13,753,900 5, (41.60) -0.75% 2. ENVIRONMENT AFFECTING FACTOR Positive Online trading system under final stages One of the bank s subsidiary applying for broker license Negative Liquidity crisis being seen in the market with few banks stopping loan disbursement The interest rates are showing signs of going upwards again The shares are still in oversupply with plenty of rights coming Festival season so things generally remain slow Page 1 of 6

3. TECHNICAL ASPECTS a. NEPSE INDEX Candlestick Pattern A large bearish candle No special pattern observed. RSI 46.

2 3. TECHNICAL ASPECTS a. NEPSE INDEX Candlestick Pattern A large bearish candle No special pattern observed. RSI The RSI has been moving along the range of 40 to 60 for the past one month Signal line above line with divergence increasing both line in positive region There was a cross over of signal line to line from top but the cross over didn t last long and the signal line is above the line indicating bearish momentum to prevail in the market Bollinger Band Bandwidth decreasing and price below 20 days moving average The bandwidth of Bollinger band is reducing indicating a reduced volatility in the sector in coming days and the price has been below the last 20 days simple moving average meaning a prevailing bearish sentiment. The entire week saw the NEPSE in sideways movement with large bearish day on the last day i.e. 28 th October There were few Doji alike candle on the first two trading days indicating indecision on part of the investor. Considering the factors in the market, the only positive thing to take market in the bullish momentum would be the online trading. Beside that the liquidity crisis arising in the market will have an impact on the interest rates. Even though there has been an agreement to keep the interest rates at or below certain rates but the increasing liquidity crisis will have a major impact on the interest rate. Moreover, the news that few banks have stopped issuing credit will have negative affect on the investor s sentiment. Page 2 of 6

b. BANKING INDEX Candlestick Pattern A large bearish candle No special pattern observed. RSI 48.

3 b. BANKING INDEX Candlestick Pattern A large bearish candle No special pattern observed. RSI The RSI has been mostly moving along the range of 40 to 60 for the past one month Signal line above line with divergence increasing both line in positive region There was a crossover of signal line to line from top but the cross over didn t last long and the signal line is above the line indicating bearish momentum to prevail in the market Bollinger Band Bandwidth decreasing and price moving below 20 days moving average The bandwidth of Bollinger band is reducing indicating a reduced volatility in the sector in coming days and the price has moved below the last 20 days simple moving average meaning a prevailing bearish sentiment. c. LIFE INSURANCE INDEX Candlestick Pattern No any special pattern observed A large bearish candle was formed following a Doji alike candle RSI No special pattern observed, the RSI has been mostly within the range throughout the week line above the signal line and in negative region After the crossover from bottom, the market has experienced slight bullish momentum moreover the Page 3 of 6

4 divergence is reducing indicating reduced volatility and moreover both the lines are in negative region meaning the market sentiment is bearish. Bollinger Band Band width decreasing The width of the Bollinger band is reducing indicating a reduced volatility in the coming days in this sector and moreover the prices are below the past 20 days moving average meaning a prevailing bearish sentiment. YOU GET RECESSIONS, YOU HAVE STOCK MARKET DECLINES. IF YOU DON T UNDERSTAND THAT S GOING TO HAPPEN, THEN YOU RE NOT READY, YOU WON T DO WELL IN THE MARKET. - Peter Lynch Page 4 of 6

d. MICROFINANCE INDEX Candlestick Pattern A large bearish candle No special pattern observed. RSI 33.

5 d. MICROFINANCE INDEX Candlestick Pattern A large bearish candle No special pattern observed. RSI The RSI has been approaching oversold region of 30 which indicates the sector is oversold and can reverse up in near future. Signal line above line and divergence increasing slightly The market is still in bearish momentum with the increase in divergence could further increase the bearish trend. Moreover the sector has moved towards the negative region indicating a negative prevailing sentiments. Bollinger Band Bandwidth decreasing and price moving below 20 days moving average The bandwidth of Bollinger band is reducing indicating a reduced volatility in the sector in coming days and the prices are approaching the lower band of the Bollinger band which could act as a support level. Page 5 of 6

CONCLUSION The one positive factor for the market is the online trading due to start soon, but the ongoing tightening of liquidity and the lack of disburseable fund for some commercial banks can

Moreover the market is approaching towards its normal support of 1220 and major support of 1210 region. The market is expected to remain in bearish and sideways movement.

6 CONCLUSION The one positive factor for the market is the online trading due to start soon, but the ongoing tightening of liquidity and the lack of disburseable fund for some commercial banks can bring negativity to the stock market. The interest rates which are already at their higher end if further goes up could have major impact on the market. Moreover the market is approaching towards its normal support of 1220 and major support of 1210 region. The market is expected to remain in bearish and sideways movement. Contact Us STRATEGY NIC ASIA Capital Limited 3rd Floor, Siddhartha Insurance Complex Babar Mahal, Kathmandu Tel No: (Hunting Line), , , Fax No: Website: The current startegy for investment would be a wait and watch strategy, with a target entry level set at around 1210 region considering the market movements and dynamics at that level. The breaking of 1210 support level could be a major point for decision making, if the market seems indication to break the 1210 level then further wait and watch strategy to be adopted else a entry level at 1210 could be followed. Disclaimer: This newsletter is designed to be used as a tutorial or educational purpose only. This information is of a general nature only, so you should seek advice from your investment advisor or others as appropriate before taking any action. NIC ASIA Capital Limited expressly disclaim representation of opinion, thus the information as in should only be used by investor who are aware of risk in securities trading. Furthermore, NIC ASIA Capital does not accept any liability whatsoever for any loss arising in the securities trading from the use of this content. Page 6 of 6

WEEKLY MARKET ANALYSIS WEEK 17 VOLUME 1 / ISSUE 8

WEEKLY MARKET ANALYSIS WEEK 17 VOLUME 1 / ISSUE 8 MOVING AVERAGE CONVERGENCE DIVERGENCE () Based on 5 day and 20 days moving average: following are the indications, Buy Indication No stock Sell Indication