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Nepse’s Technical Analysis (7 - 16 February 2014)

  2 min 17 sec to read

 
Market Trend
Nepal Stock Exchange (Nepse) Index made a significant gain of 17.32 points or 2.20% last week. Most of the rise can be attributed to the successful election of Nepali Congress candidate Sushil Koirala as Nepal’s Prime Minister on February 10, 2014. On the same day, Nepse witnessed two circuit breaks gaining more than 4.5%, however, it ended the day up 2.44%. Investor sentiment soured the following day as CPN-UML decided not to join the Congress-led government and instead stay in opposition. Investors remained jittery for remainder of the week though Nepse managed to dole out positive returns. The second quarter earnings so far have been highly positive which should increase investor optimism about dividend expectation in the current fiscal year. During this week, investors may move to investing in the primary market for the IPO of Ridi Hydropower Development Company.   
 
RSI
The positive move in Nepse resonates in the RSI as the indicator increased by 5.19 points from the previous week to end at 66.09 levels. Though RSI is currently maintaining well within the neutral zone, it is gradually approaching the overbought zone. This indicator is being supported by volume which has been stable at an average of NPR 321 Million last week. This implies a relatively stable supply and demand scenario for shares in the secondary market.      
 
MACD
The downward momentum witnessed in the MACD indicator is gradually slowing as the MACD line is close to crossing above the signal line in the near term. The MACD line increased from 8.80 to 10.60 points last week while the Signal line decreased further to 10.80 from 12.53 points. This suggests that the near term moving average is pointing towards slightly increasing upward momentum while the longer term moving average still reflects a lower trend. 
 
On Balance Volume (OBV)
On Balance Volume is a momentum indicator that relates volume to the current price of index or security. If a price increase is supported by OBV, it confirms an uptrend, whereas if a price decrease is supported by OBV, it confirms a downtrend. The theory behind OBV is that volume precedes price. In the last week, Nepse increased slightly which is supported by the rising OBV indicator. The increasing pattern of the OBV indicator shows greater market participation when compared to the previous week.
 
Market Summary

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