Lack of Buzz in Market Due to Chaitra Month-End, Dragonfly Doji Candle Forms in Technicals

The Nepalese stock market has seen little buzz due to the effects of the Chaitra month-end. During this period, investors are typically preoccupied with managing bank interest and taxes, which increases selling pressure. However, with the start of Baishakh, this pressure is expected to ease, paving the way for renewed enthusiasm in the market. Notably, a "Dragonfly Doji" candle, unseen for years, formed on the technical charts today, signaling a positive shift in the market.

Slight Decline in NEPSE Index

On the second trading day of the first week of Baishakh, Tuesday, the Nepal Stock Exchange (NEPSE) index experienced a slight decline. The index dropped by 3.44 points, settling at 2666.61. The downward trend continued from Monday, with Tuesday reflecting a similar pattern. Likewise, the Sensitive Index fell by 1.22 points, the Sensitive Float Index by 0.36 points, and the Float Index by 0.33 points.

Trading volume also saw a decrease. While Monday recorded transactions exceeding NPR 5.50 billion, Tuesday’s turnover amounted to just NPR 5.30 billion and 95 lakhs. A total of 10.643 million shares from 321 companies were traded 53,492 times.

Positive Performances by Some Companies

Despite the overall dip, a few companies posted positive results. Bottlers Nepal (Balaju), Wean Nepal Laghubitta, and Nepal Micro Insurance hit positive circuit levels in their share prices. Mailung Khola Hydropower’s share price rose by over 4 percent. However, Barahi Hydropower suffered the most significant loss of the day, with its share price dropping by 5.85 percent.

In terms of trading volume, NRN Infrastructure and Development led with NPR 591.4 million, followed by Himalayan Reinsurance with NPR 400 million and Nepal Reinsurance Company with over NPR 230 million in share transactions.

Mixed Performance Among Sub-Groups

The performance of sub-groups was mixed. Out of 13 sub-groups, 4 showed improvement, while 9 recorded declines. The Manufacturing and Processing sub-group emerged as the strongest, rising by 1.57 percent. The Finance, Non-Life Insurance, and Trading sub-groups also displayed signs of improvement.

Overall Market Situation and Expectations

Uncertainty surrounding the appointment of Nepal Rastra Bank’s governor has kept investors cautious. As central bank policies significantly influence the market, this issue continues to draw attention. The NEPSE index has remained stable within the 2500 to 2800 range for an extended period, neither plunging significantly nor reaching notable highs. Nevertheless, signs of an upward trajectory are becoming evident.

Experienced investors believe a bull run has begun. Historical patterns suggest that bull and bear phases persist for specific durations, and many argue that the current phase marks the start of a bull market. A decline in bank interest rates could positively impact the market, as lower rates typically shift investments from bank deposits to the stock market. With ample liquidity and banks emphasizing share-backed loans, affordable credit is attracting new investors.

Certain companies’ share prices remain affordable, offering potential returns for investors. Companies with strong financials and the ability to pay dividends present lower risks. Such stocks also facilitate easier access to loans against share collateral. Banks are currently prioritizing share-backed loans, while the active participation of large investors like mutual funds is further driving the market upward. Even if a correction occurs, investors anticipate the market reaching new highs.

Technical Analysis: Dragonfly Doji Candle

Today, a Dragonfly Doji candle formed on the technical chart after years, a development widely regarded as a highly positive signal. This candlestick reflects strong buyer presence in the market. Analysts suggest that if the market falls below 2660 points, additional selling pressure could emerge. However, if it holds above 2660 and breaches the 2730 level, the market is likely to climb higher.

"This candle has sparked new hope in the market. Still, I advise investors to make decisions cautiously," said a technical analyst. With the onset of Baishakh, experts expect increased enthusiasm and the possibility of the market hitting new heights.