NEPSE Gains 1.24% With Promising Market Participation: Daily Summary With Technical Analysis Insights

Mon, Jan 3, 2022 3:45 PM on Stock Market, Latest,

-ShareSansar

The NEPSE index closed at 2,616.94 today after gaining 32.03 points from yesterday's closing. This is a gain of 1.24% on the index. The index had gained 60.41 points yesterday.

230 scrips traded hands via 54,505 transactions. The Float index is at 179.60 after gaining 1.39% while the Sensitive index gained 1.22% and is now at 487.87.

Himalayan Distillery Limited (HDL) had the highest turnover of Rs. 28.44 crores closing at a market price of Rs. 4,249 per share. The shares of Nabil Bank Limited (NABIL) traded the most.

Madhya Bhotekoshi Jalavidyut Company Limited (MBJC) gained 10%, hence hitting the positive circuit breaker. Meanwhile, Ru Ru Jalbidhyut Pariyojana Limited (RURU) lost the highest 2.59%.

"Manufacturing And Processing" is the only sector that closed red today, and that too, with a minimal loss of 0.03%. Among all other sectors that closed green, "Microfinance" has gained the highest 2.88%.

Technical Analysis Highlight

The index opened at 2,595.22 and created the intraday low at 2,594.04. While it went as high as 2,634.54, it ultimately closed at 2,616.94.

Furthermore, a total of 8,205,052 shares exchanged hands amounting to Rs. 4.533 Arba in the turnover amount. This is higher than yesterday's turnover of Rs. 4.126 Arba.

The Relative Strength Index (RSI) is at 56.79. The reading was at 54.30 yesterday. The RSI breaking above 50 indicates the possibility of intermediate-term upwards momentum.

Meanwhile, both the MACD line and the signal line are still negative, i.e. below zero, with the MACD reading at -13.4. This reading was at -23.63 yesterday. The MACD line has already crossed over the signal line, indicating a mild bullish sentiment. However, the crossover would have been more significant if the MACD reading was positive. Nonetheless, the MACD line is approaching the "0" level with promising aggression.

If we draw a trend line joining the recent peaks (denoted by the blue line in the figure), it seems that the index has crossed higher from the trend line. However, it should be noted that the breakout hasn't been decisive in terms of percentage gain, although today's market session saw credible market participation. During a downtrend, the line joining the higher peaks gives a better trend line indication than joining the lower bottoms (The case is opposite during an uptrend).

To find out the probable resistance area, the author has taken the liberty of drawing horizontal lines from the most recent peaks or a series of recent peaks and bottoms that are at the same level. Resistance lines that touch a higher number of pivot points have a stronger resistance zone around them. On top of this, resistance lines drawn from the more recent pivot points are prioritized over ones that could be drawn from older pivot points, because the market has a short memory.

Thus, with these considerations, immediate resistance may be found at the 2,675-index level and then at the 2,800-index level. The 2,800-index level may function as a strong resistance zone because it touches enough pivot points and also has psychological credibility.