The Nepse index closed down 0.78% last week at 1110.68 points. The market remains bullish as the index is above its 50-day and 200-day moving averages, however volatility has increased slightly as the moving averages are converging. The MACD and RSI indicators show the market outlook is stable, while resistance and support levels were unchanged. Trading volume was slightly higher than the previous week.

1. TECHNICAL ANALYSIS
1. Market Summary (as of December 17, 2015)
NEPSE at close last week (December 17, 2015) 1110.68
NEPSE high last week (December 15, 2015) 1121.02
Weekly Change -8.67 points (or -0.78%)
Daily Volume (Avg.) NPR 38.29 crores
Total Traded Amount (weekly) NPR 191.46 crores
RSI 54.73
MACD Line 5.97
Signal Line 0.39
2. Nepse Figure
Nepse (June 1, 2014 – December 17, 2015)

2. 3. Trend Analysis
The benchmark index ended in the red for most of last week. Nepse lost 8.67 points (or down 0.78%) to close
at 1110.68. No major political news had influenced the market, and the demand and supply is taking its
normal course. The index is still above the 50-day and 200-day moving average, indicating that the market
remains bullish. However, the 50-day and 200-day MA is closing in, which signify that the market is
averaging with low volatility. Recent news regarding the capital plan increment for insurance sector has
caused the hike in the demand for insurance companies. Furthermore, book closer date for attractive
microfinance bonuses has hiked up the prices of microfinance banks.
4. Resistance and Support
Immediate Support 1089
Support 2 1020
Immediate Resistance 1130
Resistance 2 1175
The Nepse index hovered between the immediate support and resistance level last week. It seems that no
positive news have caused the market to move sideways and below. The index will cross above the
resistance level if the political situation in the country improves.
5. Trend Indicator
a.) 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.
The Macd and signal line, at the beginning of the week, stood at 2.31 and -6.98 respectively. Both the
lines continued to climb up, where the macd line is moving above the signal line. Furthermore, the signal
line also entered the positive territory towards the end of the week, indicating that the market outlook
looks good. At the end of the week, the macd and the signal line closed at 5.97 and 0.39 respectively.

3. b.) 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.
The RSI continued the hover around the 50’s zone throughout last week as well, which shows that the
market is at a neutral stance. The RSI at the beginning of the week stood at 59.04 level. It lost 4.31 points
to close at 54.73 level.
c.) 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.
In the course of last week, the benchmark index moved away from the upper band and towards the mid
band. The band still indicates that there is not much selling pressure in the market. The upper and lower
bands continue to widen, indicating a rise in the market volatility.

4. 6. Volume Indicator (On-Balance Volume)
On-Balance Volume (OBV) is a momentum indicator that relates volume to the current price of the index
or security. It measures buying and selling pressure at the market. It acts as a cumulative indicator that
adds volume on up days and subtracts volume on down days. 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.
Both the On-Balance Volume (OBV) and Nepse index moved sideways in the course of last week. Not
much change was seen in the volume as the average weekly volume transactions went up slightly to NPR
38.29 crores from NPR 37.34 crores the week prior.
7. Overview
The Nepse index lost 8.67 points (or down 0.78%) to close at 1110.68. The market is above the 50-day and
200-day moving average. However, no positive news has left the market to decline slightly. The macd line
shows hope as the signal line entered the positive territory as well. The RSI is still hovering around a neutral
stance. The resistance and support level remains unchanged. The Bollinger bands still show signs of increase
in market volatility due to divergence in upper and lower bands.

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