Market Performance (31/03/2019-04/04/2019)

After the spell of strong bearish move till 1100 level the INDEX saw some relief from the past week and made a positive close this week too. The Index had a range of 30 pts this week. But the Index closed with a gain of21.61 pts this week increased by 1.89% from its open. The average Monthly volume of the Index is 291 million whereas the average weekly volume of the index is 391 million. We can see the accumulation of volumes in past two weeks. This indicates the positive sentiment of the market. The current increase in the volume leads the positive biasness and is expected to continue this week.

Weekly Statistics

Top 10 Securities by Amount Traded

Listing from (31/03/2019-04/04/2019)

Technical Analysis

1.    Weekly Support & Resistance 

2.    Exponential Moving Average (EMA)

50-day EMA:1148                                                                                   200-day EMA:1200

The market is currently trading above its 50-day EMA. This indicates that the market is out of its short term bearish pressure. The market need to settle above 1200 area to relief itself from the pressure of its major bearish Trend.

3.Average Directional Index (ADX) 

As ADX is used to measure the trend strength, the value of ADX being 25.56 at present indicates the strength of current trend to be strong. But a recent pull back in the market has not made any impact in the ADX movement. Able to maintain a level above 25 the current trend is likely to continue. 

+DI and –DI now seems to start the diverging phase indicating the continuation of the current trend. +DI being able to sustain the current level and –DI still going down we will see some major upward moves in the market.

 Momentum Analysis

RSI (14):63

MACD (12,26,9) line: 7.12

Signal (12,26,9) Line: 4.05

MACD (12,26,9) histogram: 2.13 

We can see that both of the momentum indicator seems to be in positive tone here.The indication shows the positive moment has been maintained in the market. We might see a small pullback and a major upward move till the level of 70+ in RSI where as being a lagging indicator the MACD will remain positive.

Fundamental Analysis 

The economy is estimated to grow above 6% in this FY. The economic activities seem to accelerate backed by strong domestic demand and Increase Capital Expenditure. The agriculture sector will likely grow from 2.8% in FY2018 to 4.5% in FY2019, owing to a good monsoon that is expected to boost paddy production to 5.5 million tons, a rise of 8.4% from the previous year. The industry sector is expected to expand by 7.1% in FY2019 buoyed by improved electricity supply and efforts to improve the investment climate. And the services sector will likely grow by 6.4% in FY2019 with the expansion of wholesale and retail trade, hotels and restaurants, and financial intermediation.

Revenue collection has primarily increased on higher import growth and an improvement of the tax system. The budget as of mid-January 2019 is in surplus by NRs173.3 billion owing to strong revenue growth and a marginal slowdown in recurrent expenses. Though capital expenditure has surged in the fiscal year through mid-February, its execution stands at only 22.5%. This could again lead to a spending spree in the last month of the fiscal year, undermining the quality of capital projects, says the update.

With rising trade and current account deficit, Nepal increasingly faces the risk of external sector instability. Data to mid-February 2019 show that trade deficit has surpassed net invisible earnings, widening the current account deficit to $1.5 billion, marginally up from a deficit of $1.4 billion in the year earlier period. The current account deficit is projected to widen further to 9.3% of gross domestic product in FY2019, up from 8.2% a year earlier on increased imports of capital and consumer goods and services, notwithstanding a healthy growth of remittances and stable oil prices, says the update.

With a positive end on the conclusion of the Investment summit recently we look forward to some promising FDI in the economy in 2019. 

Investment Themes 

·         Equitiesare gaining positive momentums in a meanwhile and seems to be at accumulation phase.

·         Long-term growth prospects and cheap absolute and relative valuations support Equities.

·         Core Fixed income protects tend to head for anupturn as we can see relaxation of interest rates in the market.

·         Government Consideration of bring FDI in Capital market give a positive tone this week.

·         Stocks’ with high dividend yield are to be considered for buying and maintaining a high Beta portfolio seems be rationale at the moment.

 Disclaimer:

The report concerns the trading statistics and outlook based on the market performance from 31^st March 2019 to 4^th April2019. The information in the document has been printed on the basis of publicly available information.Internal data and other sources believed to be true and are for general guidance only but which may have not been verified independently. While every effort is made to ensure the accuracy and completeness of information contained.