Technical Analysis of Century Commercial Bank Ltd. (CCBL) [April 2016 - April 2017]
Thu, Apr 6, 2017 12:56 PM on Latest, Featured, Technical Analysis, Stock Market,
Price Chart Analysis of CCBL
The price history of CCBL of last one year shows that its price was Rs.371 on 4th April 2016 and increases with rises in NEPSE and reaches to the level of Rs.615 on July 25, then starts to fall continuously. After adjustment of 30% right share of 2071/2072 its price falls to Rs.465 (August 2nd 2016) from Rs.575 (August 1st 2016). After adjustment of right share, price moves with NEPSE index and falls to Rs.255 on 12th February 2017 when NEPSE index is at its minimum level for the period (1252.50). After minimum index of 1252.50 in bearish trend, NEPSE starts its positive journey by showing green signal to all the stocks. The declaration of 10% stock dividend by the net profit of 2072/2073 increases its price level and drives it up to Rs.405 on 28th March 2017. After the adjustment of bonus share of 10%, it prices falls to Rs.361 from Rs.397 on 2nd April.
Candlesticks Chart Analysis of CCBL
Here, green and red candle in the candlestick chart shows the buying and selling pressure of CCBL stock in the stock market. The buying pressure is high in the month of June because of right shares. Those shareholders who hold the share before book closing day were eligible for the right share and after the book closing day the price of stock is adjusted and price falls to Rs.465 from Rs.565 and it reflects the selling pressure in the market. Smart investors sell their stock after price adjustment by booking dividend or right share which creates selling pressure in the market. Candlestick chart shows that when the NEPSE is in positive trend, the buying pressure increases as investor assume the market will climb up and they might have to pay more for the stocks in the future.
Relative Strength Index (RSI) Analysis
Relative Strength Index measures the speed and changes of price movement of stocks. It is computed by using the formula,
RSI = 100-[100/ {1+ (Average of Upward Price Change/Average of Downward Price Change)}]
Relative strength index lies between “0” to “100”, value of RSI above 70 indicate stocks are overbought in the market (buying pressure is high). Similarly, RSI at 30 or below the level of 30 indicate stocks are oversold in the market (selling pressure is high). The RSI of CCBL was around 30 in the second week of February, due to high selling pressure and panic nature of investors and the NEPSE was also continuously falling. With positive signal in NEPSE and after declaration of 10% bonus share after that 40% right share, it provides positive energy to CCBL stocks and RSI reaches to 80 at the end of March (a day before book closing date).
Moving Average Convergence Divergence (MACD) Analysis
Moving Average Convergence Divergence (MACD) is a trend following momentum indicator that shows the relationship between two moving average of price. It is calculated by subtracting 26-day exponential moving average (EMA) from 12- day Exponential moving average. A 9 day EMA of MCDA is called “Signal Line”. Analysis is done on the basis of current price, if current price of stock falls below the signal line it indicate that the stocks is in bearish trend and there is a possibilities of reducing the price level till the bearish trend continue, similarly if current stock price is above the signal line we can say that the stock is in bullish trend and there is a chances of increasing price. MACD below the “0” level gives buy signal to the investor whereas above “0” level gives sell signal to the investor. It’s a technique that suggests the investor to sell the stocks when the price rises and vice versa.
Conclusion
Technical analysis is the analytical tool used by investor to make an analysis of buying, selling or holding the stocks they are having. Technical analysis is the easiest one and can be done by people who have simple knowledge of stock market and MS Excel. Analysis helps the analyst to know about the current trend in market, it also helps to predict the price of stocks in the near future. Technical Analysis is fully based in past data and information, mainly used technical analysis tools in Nepalese share market are Line Chart Analysis, Candlesticks Analysis, Relative Strength Index (RSI) Analysis and Moving Average Convergence and Divergence (MACD) Analysis.
The price history of CCBL of last one year shows that its price was Rs.371 on 4th April 2016 and increases with rises in NEPSE and reaches to the level of Rs.615 on July 25, then starts to fall continuously. After adjustment of 30% right share of 2071/2072 its price falls to Rs.465 (August 2nd 2016) from Rs.575 (August 1st 2016). After adjustment of right share, price moves with NEPSE index and falls to Rs.255 on 12th February 2017 when NEPSE index is at its minimum level for the period (1252.50). After minimum index of 1252.50 in bearish trend, NEPSE starts its positive journey by showing green signal to all the stocks. The declaration of 10% stock dividend by the net profit of 2072/2073 increases its price level and drives it up to Rs.405 on 28th March 2017. After the adjustment of bonus share of 10%, it prices falls to Rs.361 from Rs.397 on 2nd April.
Candlesticks Chart Analysis of CCBL
Here, green and red candle in the candlestick chart shows the buying and selling pressure of CCBL stock in the stock market. The buying pressure is high in the month of June because of right shares. Those shareholders who hold the share before book closing day were eligible for the right share and after the book closing day the price of stock is adjusted and price falls to Rs.465 from Rs.565 and it reflects the selling pressure in the market. Smart investors sell their stock after price adjustment by booking dividend or right share which creates selling pressure in the market. Candlestick chart shows that when the NEPSE is in positive trend, the buying pressure increases as investor assume the market will climb up and they might have to pay more for the stocks in the future.
Relative Strength Index (RSI) Analysis
Relative Strength Index measures the speed and changes of price movement of stocks. It is computed by using the formula,
RSI = 100-[100/ {1+ (Average of Upward Price Change/Average of Downward Price Change)}]
Relative strength index lies between “0” to “100”, value of RSI above 70 indicate stocks are overbought in the market (buying pressure is high). Similarly, RSI at 30 or below the level of 30 indicate stocks are oversold in the market (selling pressure is high). The RSI of CCBL was around 30 in the second week of February, due to high selling pressure and panic nature of investors and the NEPSE was also continuously falling. With positive signal in NEPSE and after declaration of 10% bonus share after that 40% right share, it provides positive energy to CCBL stocks and RSI reaches to 80 at the end of March (a day before book closing date).
Moving Average Convergence Divergence (MACD) Analysis
Moving Average Convergence Divergence (MACD) is a trend following momentum indicator that shows the relationship between two moving average of price. It is calculated by subtracting 26-day exponential moving average (EMA) from 12- day Exponential moving average. A 9 day EMA of MCDA is called “Signal Line”. Analysis is done on the basis of current price, if current price of stock falls below the signal line it indicate that the stocks is in bearish trend and there is a possibilities of reducing the price level till the bearish trend continue, similarly if current stock price is above the signal line we can say that the stock is in bullish trend and there is a chances of increasing price. MACD below the “0” level gives buy signal to the investor whereas above “0” level gives sell signal to the investor. It’s a technique that suggests the investor to sell the stocks when the price rises and vice versa.
Conclusion
Technical analysis is the analytical tool used by investor to make an analysis of buying, selling or holding the stocks they are having. Technical analysis is the easiest one and can be done by people who have simple knowledge of stock market and MS Excel. Analysis helps the analyst to know about the current trend in market, it also helps to predict the price of stocks in the near future. Technical Analysis is fully based in past data and information, mainly used technical analysis tools in Nepalese share market are Line Chart Analysis, Candlesticks Analysis, Relative Strength Index (RSI) Analysis and Moving Average Convergence and Divergence (MACD) Analysis.
- Bishnu Panthi, MBA Student
University of Mysore (UOM)
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