Nepse saw one of its biggest weekly gains in recent times, rising 4.07% to close at 856.76 points. This was driven by strong third quarter results from listed companies boosting consumer confidence. Trading volume was high at NPR 2.39 billion, helping Nepse break above key resistance of 831.86 points. Technical indicators like RSI and MACD showed increased momentum and demand, pushing the market into overbought territory. While near-term momentum remains upward, the market may see a short-term pullback if daily volume falls below NPR 45-50 crores. The long-term trend remains bullish despite potential near-term volatility.

1. Technical Analysis
1. Market Summary (as of May 08, 2014)
Nepse at close last week (May 08, 2014) = 856.76
Nepse high last week (May 07, 2014) = 866.25
Weekly Change = 33.52 points (or 4.07%)
Weekly Volume (Avg.) = NPR 478,733,275
Total Traded Amount (weekly) = NPR 2,393,667,865
Immediate Support = 831.86
Immediate Resistance = 915.38
Psychological Resistance = 900.00
RSI = 71.52
MACD Line = 15.25
Signal Line = 10.62
2. Market Trend
After steady growth in Nepse over the past last six weeks, the market saw a dramatic rise of 33.52
points (or 4.07%) to end at 856.76 points this past week. This is one of the biggest weekly gains
witnessed in recent times, finally bringing respite to shareholders of commercial banks who had only
seen mediocre performance during the last few months. There was a major event that took place last
week from a technical analysis point of view. Nepse was able to cross above the strong resistance of
831.86 points with high volume on Monday which is a significant breakthrough for the market. Over
the past week, the total market volume amounted to NPR 2.39 billion which has been critical in
propelling the market to new heights. The high volume can also be partly contributed to resumption
of trading of Global IME shares. The last time Nepse was at this level was about five and a half years
ago when Nepse closed at 853.16 on Nov 02, 2008. The resistance level of 831.86 will now act as a
support level in the days ahead.

2. Nepse (Jan 01, 2014 – May 08, 2014)
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. Nepse witnessed excessive buying this past
week which has also reflected on the RSI indicator as it moved into overbought zone. As of May 07,
2014, the RSI closed at 79.98 levels indicating an increased demand for stocks. On the final trading
day, the RSI fell to 71.52 levels but still maintained within the overbought zone.
RSI (Jan 01, 2013 – May 08, 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
735
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815
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NEPSE
Date
NEPSE (Jan '14 - Present)
Series1
Resistance:831.86
Support:753.17
50-dayMovingAvg

3. considered to be a positive sign and indicates a time to buy, and vice-versa. During the past week, the
MACD indicator also witnessed a huge jump citing increased momentum in the market. The MACD
line and the Signal line increased from 7.08 and 6.25 points to 15.25 and 10.62 points respectively.
The leap made by the MACD line indicates that the near term momentum is pointing in the upwards
direction.
MACD (Jan 01, 2013 – May 08, 2014)
5. Bollinger Band
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. The huge demand witnessed this past week
saw Nepse move past the upper band. This represents an overbought scenario and the market may
see a short pullback in the near term. The upper and lower bands are likely to see a divergence in the
near future.
Bollinger Bands (Nov 04, 2013 – May 08, 2014)
Overview:
Nepse recorded one of its best weeks in recent times as the market leaped by 33.52 points (or 4.07%)
to close at 856.76 points. There was a huge boost in consumer confidence that was initially triggered
by outstanding 3rd
quarter results from several listed companies. Nepse moved past its strong
resistance level of 831.86 points with high volume suggesting an improved market scenario as well as

4. demand for stocks. The RSI along with the MACD indicator saw a major increase which pushed the
market into overbought territory. The Bollinger Bands also suggest that the market may be slightly
overbought at current levels. Though the near term momentum is still in the upward direction, Nepse
may witness a short pullback in the near term if the current volume of NPR 45-50 crores cannot be
sustained. Overall, the long term trend of the market is still very bullish; however, the market may
see some volatility in the near term.