NEPSE had closed higher in 37% of January months and 42% of February months since 2011! How will it perform during this January and February?

Should I invest at around 2 PM? Should I invest during Dashain?

Seasonality in stock market has been widely accepted by the investors as they take investment decision. Nepalese stock market is at a turning point where new features are being added in order to develop efficient investing market. In this scenario, an investor can consider how an index or a stock has performed during certain time frame along with other criteria of investment.    

The month of Magh (15^th of Jan to 15^th of Feb) is approaching. Magh in Nepalese calendar will be a period in which listed companies will publish their second quarter reports. Moreover, BFIs will also continue to announce dividends and conduct AGMs that have not been accomplished within Poush. All these events can help to justify behavior of investors during the month of Magh. How indices have performed throughout Magh will help investors to prepare their investment decision accordingly.

For instance, let us understand how NEPSE index has performed during moth of Magh:

Based on NEPSE’s performance since 2011, NEPSE Index has closed higher in 37.5 % of January month and 42.86% of February month. In terms of actual gain, NEPSE has lost 1.26% in January whereas gained 1.02% in the month of February.

Besides, if we consider the banking index and development bank index, these indices have also closed higher in 37.5% of January month. Since NEPSE has a larger market capitalization from banking sector, the banking sector indices behavior is correspondent to that of NEPSE’s index behavior in Magh month.

Besides, sectors such as Hotels, Manufacturing and Others Sub Indices have closed 62.5% higher of January months. One of the possibilities of these sectors to outstand NEPSE index could be less number of companies listed from these sectors. However, microfinance sector has not reported to do well in the month of Magh.

In the month of February, Development Bank Sub Index has been found to do the best. For instance, the index closed higher in 85.71% of Febrary months since 2011. Similarly, a gain of 4.93% was also witnessed by the index in the month of February. 

The concept of seasonality has been validated by international stock market as that of USA. The rising stock market during December and January has been evident that festivity usually affects the stock market in USA. Moreover, the continuous announcement that companies like Tesla, Goldman Sachs are providing investors to remain calm as this year’s growth might not be convinving to investors is also evident how months near to financial report publication can affect investors decision.

Moreover, there is no guarantee for seasonality to work every single time. This year’s indices performance in US during December and January shows that there are other factors that might take over indices performance during certain seasons. In USA, US-China trade wars, privacy scandals of companies like Facebook, FAANG (Facebook, Amazon, Apple, Netflix and Google) indices performances overtime, Apples decision to cut production in China and Fed’s continuous hike in interest rates have taken over the indices seasonality performances.

In Nepal also, currently investors have just come out of a hunger strike, authorities have amended several stock market policies, brokers are against banks for getting brokerage licenses, online trading did not stand as expected so, whether seasonality for the month of Magh will work out as in the past is yet to be observed. Authorities from NRB had ordered banks not to be aggressive in terms of interest rates, new policies for the development of stock market have been drafted, online trading has been implemented, mutual funds are believed to have increased investment by few amount during Mangsir so, the possibilities for indices to perform well in Magh cannot be ignored as well.  

 To understand the behavior of the individual stocks in your portfolio during Magh, do log in to SS Pro.