Combining Technical and Fundamental Analysis in NEPSE

In the world of investing, both technical analysis and fundamental analysis play vital but distinct roles. While fundamental analysis helps investors understand the intrinsic value of a company based on its earnings, financial health, and long-term prospects, technical analysis focuses on price behavior, volume, and market psychology to identify the right entry and exit points. When combined, these two powerful methods create a holistic investment strategy — one that balances logic with timing, making it especially effective in the Nepal Stock Exchange (NEPSE).

Fundamental analysis answers what to buy — by evaluating key indicators such as Earnings Per Share (EPS), Price-to-Earnings (P/E) Ratio, Book Value, Dividend Yield, Debt-to-Equity Ratio, and Return on Equity (ROE). It identifies companies that are undervalued but have strong long-term potential. For example, commercial banks with high Capital Adequacy Ratios (CAR) and stable profits may indicate solid fundamentals, while hydropower companies with long-term Power Purchase Agreements (PPAs) show reliable revenue streams.

On the other hand, technical analysis answers when to buy or sell — using tools like support and resistance, moving averages, RSI, MACD, and candlestick patterns. These indicators reveal short-term market momentum, investor sentiment, and reversal zones. For example, an investor might use RSI to confirm when a fundamentally strong bank stock becomes oversold, signaling a good buying opportunity.

By combining both approaches, investors can reduce risk and increase precision. A fundamentally strong company ensures long-term safety, while technical analysis helps find optimal timing for entry and exit. This method is called “Techno-Fundamental Investing” — a hybrid approach that merges value-based decisions with technical confirmation.

For Nepali investors, this strategy is highly relevant due to market volatility and limited liquidity. NEPSE often experiences emotional buying or panic selling, making timing just as crucial as valuation. By first screening companies through fundamentals and then validating trades technically, investors can achieve consistent results even in uncertain conditions.

According to Sandeep Kumar Chaudhary, Nepal’s leading Technical and Fundamental Analyst and founder of the NepseTrading Training Institute, “Fundamentals tell you what to buy; technicals tell you when to buy. Combining both gives you confidence, clarity, and consistency in your trading decisions.” With 15+ years of banking and stock market experience, and having trained over 10,000 Nepali investors, he teaches that blending both sciences transforms average traders into strategic, long-term investors.