Weekly Summary: NEPSE Concludes the Week With 5.27% Loss, Have the Bears Exhausted Themselves?

Fri, Dec 10, 2021 12:06 PM on Stock Market, Weekly Analysis,

-ShareSansar

NEPSE closed green only one day in the five trading days this week. The NEPSE index closed at 2,449.97 this week after a fall of 136.22 points (5.27%). The index had closed at 2586.19 last week with a fall of 5.33% from the week before that.

This week, the index went as high as 2,590.39 and as low as 2,428.84, hence witnessing volatility of 161.55 points.

Analysis of Trend

The NEPSE index is up more than 25% compared to the same date last year. However, it has lost more than 20% from the all-time high of 3,198.60 created around four months ago. This is also the lowest the index has been in the last nine months.

Candlestick Charting/ Patterns

The last trading day of this week saw a formation of a small-body candle with wicks on both sides (on the candlestick chart). A hammer candlestick had also formed on Monday with an extended lower wick. Both candlesticks signal an equalization among the bulls and the bears and also indicate potential exhaustion of the ongoing trend. Thus, it can be inferred that the bearish momentum might have exhausted itself. However, chart analysts will be closely watching the index movement next week, since the price action seen this week is inconclusive without further confirmation.

Moving Averages

NEPSE index is below both 5 days Exponential Moving Average (EMA) and 20 days EMA. The index below these moving averages signals for bearishness. The 5 days EMA crossed the 20 Days EMA from above on November 25, forming a Dead Crossover pattern. The Dead Cross is a technical pattern indicating the potential for a downtrend, and the index has been losing ever since.

The 200-day simple moving average (SMA) is also considered a key indicator by traders and market analysts for determining overall long-term market trends. The price went below the 200-day SMA on November 23. When a stock price moves below the 200-day moving average, it's considered a bearish signal indicating a likely downward trend in the stock.

Momentum Indicators

The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or index. Traditional interpretation and usage of the RSI are that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.

The RSI reading on the daily timeframe is 27.42. Meanwhile, the RSI reading on the weekly chart is at 37.95.

On the other side of things, both the MACD line and the signal line are negative, i.e. below zero in the daily timeframe, with the MACD reading at -68.77. The MACD line is below the signal line, and both are negative, hence indicating a general pessimism in the market.

Support and Resistance

There is no rigid rule to deduce support and resistance levels from a stock/ index chart.

The resistance level is simply the price above which the index has had trouble moving up. Thus, the previous high (or a series of highs if they are on the same level) can be used as resistance. Meanwhile, if the stock or index chart has gone below the previous low, it can also be inferred as a resistance level, since the previous support level acts as resistance if the price/ index has broken below it.

On the other hand, the support level is simply the price below which the index has had trouble moving down. Thus, the previous low (or a series of low if they are on the same level) can be used as support. Meanwhile, if the stock or index chart has gone up the previous high, it can also be inferred as a support level, since the previous resistance level acts as support if the price/ index has broken above it.

With these considerations, the NEPSE has index has immediate resistance at around 2,504.97. Further resistance may then be found at

i) 2,569
ii) 2,669.30
iii) 2,805

On the other side of things, the nearest previous low is at 2,369.66, which may serve as immediate support.

Weekly Market Summary of NEPSE:

More than 3.98 crore unit shares worth Rs 17.09 Arba have been traded through 2.64 lakh transactions this week. The current market capitalization of NEPSE stands at Rs. 3,444,264.28 million.

NEPSE index and Sub-indices performance: (Decline is based on the previous week closed value)

The NEPSE index decreased by 5.27% this week. All the sectors lost in this week.

Stock with the highest monthly Beta value from the Microfinance and Non-life insurance and Hydropower.

Panchakanya Mai Hydropower Limited (PMHPL) has the highest monthly Beta value of 2.94 followed by Ghalemdi Hydropwoer Limited (GHL) and Shree Investment Finance Company Limited (SIFC) with 2.61 and 2.51 beta values respectively.

Top Ten Gainers of the week:

Laxmi Equity Fund (LEMF) is the top gainer of this week. LEMF closed at Rs. 0.74 with Rs. 10.40 (7.66%) increment.

All the analysis is done with the SS Pro Software. To know more about the software, click on the link below

SSpro

Top Ten Losers of the week:
Global IME Samunnat Scheme 1 (GIMES1) price has decreased by 49.24% and its LTP stands at Rs. 10.70.

Top Stocks by Turnover, Volume, and Number of Transaction:

National Hydropower Company Limited (NHPC) is the top traded company of the week. A total of Rs. 70.71 crores worth of NHPC shares were traded this week.