NEPSE Index Drops, Declining Turnover and Breakdown of 50-Day Moving Average

NEPSE

The Nepal Stock Exchange (NEPSE), the primary index of the Nepalese stock market, closed lower on the final trading day of the week. The NEPSE index dropped by 9.22 points, reaching 2757.97 points, continuing the downward trend from the previous day. Along with this, the Sensitive Index dropped by 0.69 points, and both the Float Index and the Sensitive Float Index also decreased by 0.50 and 0.21 points, respectively.

Along with the NEPSE index, the total trading volume also decreased on this day. The total trading amount, which had been decreasing throughout the week, saw further reduction. On Wednesday, a total of NPR 5.20 billion worth of shares were traded, while on this day, 319 stocks were traded 56,824 times, amounting to a total value of NPR 5.02 billion (equivalent to 168,555,000 shares being bought and sold).

Shares of Vikas Hydropower were still traded at a positive circuit level, with its share price increasing by NPR 32.10, reaching NPR 353.40 at the close. The share price of Samudayik Laghuvitta Financial Institution increased by about 5%. However, Jan Utthan Community Microfinance Financial Institution saw its share price drop by 4.65%. Most other stocks showed a price increase of less than 3%.

Based on trading volume, Himalayan Reinsurance was at the top, with NPR 24.09 million worth of shares traded. Nepal Reinsurance Company traded shares worth NPR 20 million, while Balephi Hydropower saw over NPR 14 million worth of shares traded.

Among 13 subgroups, 1 subgroup saw an increase in its index, while the remaining 12 subgroups saw a decrease. The Life Insurance subgroup's index increased by 0.14%, while the other decreasing subgroups saw a decline of less than 1%.

According to fundamental analysts, investors seem to be waiting for some significant news, particularly regarding the demand for easing share investment for banks and facilitating margin trading. If these demands are fulfilled, it is expected that the market could see positive movement. Sources from the central bank have confirmed that preparations for these changes are in the final stages.

Technical Analysis

Technical analyst Ajit Khanal pointed out that the market broke down below the 50-day moving average, closing beneath it. Recently, the market had been struggling around the 50-day moving average, but it appeared weak due to lower trading volumes. However, there is some hope that a positive response may emerge if the market reacts at the 61% retracement level.

That said, most technical indicators are signaling negative trends in the market. If the market breaks the 61% retracement level, it could move further into a negative direction. Additionally, the Relative Strength Index (RSI) was below 40 today, indicating weakness in the market.

Furthermore, the trading volume today was the lowest since Chait 26, and the market showed a continuous downward trend after 12:10 PM. Between 12:10 PM and 3:00 PM, the market did not create any new higher highs, and the trades from the top 10 brokers showed similar buy and sell amounts, confirming the market’s sluggish condition.