Technical analysis of Nepal Stock Exchange (Nepse) index for the week from July 27, 2014 to July 31, 2014. The technical analysis includes summary, RSI, MACD and Bollinger band analysis. The analysis is done by Kriti Capital & Investments Ltd.

1. Technical Analysis
1. Market Summary (as of Aug 01, 2014)
Nepse at close last week (July 31, 2014) 1066.09
Nepse high last week (July 27, 2014) 1073.93
Weekly Change -13.00 (or -1.20%)
Daily Volume (Avg.) NPR 51.06 crores
Total Traded Amount (weekly) NPR 2.04 billion
Immediate Resistance 1083.55
Immediate Support 1025.69
RSI 72.54
MACD Line 34.60
Signal Line 37.91
2. Market Trend
After 9 continuous weeks of positive gains in the market, Nepse moved in the opposite direction this
past week. The secondary market declined by 13.00 points (or -1.20%) to close at 1066.09 points. The
daily average volume also witnessed a huge decline as the average daily volume for this week fell to
NPR 51.06 crores from NPR 89.72 crores last week, a decrease of NPR 38.66 crores each day on
average. The daily average trading in the previous to last week was NPR 66.46 Crores. Numerous
brokers were not able to trade this week on three different days which is partly responsible for the
reduced turnover in the market. The excitement witnessed in the market over the past few weeks
subsided this week as Nepse could not carry ahead the momentum from previous weeks. The current
resistance and support levels stand at 1083.55 and 1025.69 respectively.
Nepse (Jan 01, 2014 – July 31, 2014)

2. 3. RSI
RSI is a form of leading indicator that is believed to be most effective during periods of sideways
movement. Such indicators may create numerous buy and sell signals that are useful when the
market is not clearly trending upwards or downwards. Following the market trend, the RSI indicator
also witnessed a big decline as it closed at 72.54 levels by the end of trading week, which is 11.12
points lower when compared to the previous week. However, the RSI has been able to maintain just
above the overbought levels.
RSI (Jan 01, 2013 – July 31, 2014)
4. MACD
The MACD is a momentum oscillator formed by using two different types of moving averages, which
provides specific buying or selling signals. When a MACD line crosses above the signal line, it is
considered to be a positive sign and indicates a time to buy, and vice-versa. On Monday, the MACD
line crossed below the signal line triggering a sell signal in the market. This indicates that the near
term moving average (MACD line) has been on a declining trend when compared to the longer term
moving average (Signal line). At present, the MACD and Signal lines are maintaining at 34.60 and
37.91 points respectively.
MACD (Jan 01, 2013 – July 31, 2014)
5. Bollinger Bands
The Bollinger Band is a technical indicator that consists of a moving average (21-day) along with two
trading bands above (upper band) and below it (lower band). The bands are an indication of volatility,
which are represented by calculating standard deviation. Since the Nepse line moved away from the
upper band last week, it has continued on a lower trend. As a result, Nepse is inching closer towards
the mid-band suggesting that the market is gradually moving towards neutral levels from the
overbought zone.

3. Bollinger Bands (Nov 04, 2013 – July 31, 2014)
Overview:
After reaching multiple new highs during the last several weeks, Nepse consolidated during the past
trading week. With momentum on the lower side, Nepse declined by 13.00 points (or 1.20%) and
closed at 1066.09 points. The average daily turnover remained at NPR 51.06 crores this week, which
is a significant drop from NPR 89.72 crores from the previous week. The next resistance and support
levels stand at 1083.55 and 1025.69 respectively. The RSI declined by 11.12 points to maintain at
72.54 levels, however, it is still maintaining slightly above the overbought line. The MACD line crossed
below the Signal line this week suggesting a sell signal in the market. The Bollinger Bands indicate
that the market is gradually moving away from the overbought zone as it moves closer to the mid-
band. Most indicators represent an overbought market in recent times; however, we may see low
volatility and sideways movement in the near future considering Shrawan as the month of fourth
quarter financial reporting by listed companies.

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Nepse (Jan 01, 2014 – July 31, 2014)

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RSI (Jan 01, 2013 – July 31, 2014)
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MACD (Jan 01, 2013 – July 31, 2014)
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6. Bollinger Bands (Jan 01, 2013 – July 31, 2014)
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