NEPSE testing support at 1540-1550 levels; Market fairly indecisive today with a minimal loss of 3.19 points

Wed, Sep 30, 2020 3:41 PM on Stock Market, Latest,

The NEPSE index lost 3.19 points (0.21%) today and ultimately closed at 1,550.43.

The NEPSE index had lost a massive 20.83 points from the day's high of 1,563.40 and reached 1,542.57. However, the market rebounded in the last trading hour and only showed a minimal loss of 3.19 points from yesterday's close.

8,019,661 shares exchanged hands and produced a total turnover of Rs. 1.95 Arba. 190 scrips were traded via 36,282 transactions. The float index lost 0.18 points and closed at 107.69 while the Sensitive index is at 307.17 after losing 0.64 points.

Nepal Reinsurance Company Limited (NRIC)'s shares produced the highest individual scrip turnover of Rs. 11.24 crores. This is the first time NRIC rebounded and returned to being the scrip with the highest turnover. Because of high investor optimism, NRIC had maintained the streak of highest-turnover scrip after it was listed in NEPSE. NRIC was then pushed back by other companies with greater daily turnover until today.

National Hydro Power Company Limited (NHPC)'s shares traded the most and closed at Rs. 98 per share.

A total of 10 companies hit a 10% positive circuit today (technically). They are Kamana Sewa Bikas Bank Limited (KSBBL), Joshi Hydropower Development Company Limited (JOSHI), Ghalemdi Hydro Limited (GHL), Ankhukhola Hydropower Company Limited (AKJCL), Union Hydropower Company Limited (UNHPL), Panchakanya Mai Hydropower Limited (PMHPL), Khani Khola Hydropower Company Limited (KKHC), Dibyashwari Hydropower Company Limited (DHPL), Karnali Development Bank Limited (KRBL), and Himal Dolakha Hydropower Company Limited (HDHPC).

Interestingly, 8 of the 10 companies that technically gained 10% today are all hydropower companies. The remaining two are development banks.

Meanwhile, Nepal Finance Limited (NFS) lost the most 6.87%.

Only four sectors gained today while all others lost. Development Banks gained the most 1.87% and Trading lost the most 1.06%.

After we reported the formation of a three black crows candlestick pattern last time, NEPSE's movement has been sluggish at best. The index has neither succeeded to surge upwards nor slipped down decisively. While the three black crows is a bearish reversal pattern, it seems that its appearance in NEPSE's chart has slowed the upward momentum.

Also, the index is repeatedly testing the support at 1,540-1550 area. This area was NEPSE's resistance previously. However, the NEPSE index had broken upwards from this level. It now seems that the index is back again testing this level. This can be viewed either as a minor pullback or as a potential reversal. We can't really say until the chart breaks decisively from the support line.

Image: Notice how the index has spent a significant amount of days testing the support. It depends on who can push the farthest between the bulls and the bears (symbolized by the arrows.)

The support area is also supported by the Fibonacci retracement. Support and resistance aren't rigid lines but a narrow area. Thus, all indicators point out that 1,540-1,550 is a strong support area for NEPSE.

Image: Fibonacci retracement also verifies the support at that level. The Fibonacci signal is made bold in blue for clarity. 

Where do you think the market is headed? Drop your opinion in the comment section below.