Technical Analysts Say: Today's Market Decline is Normal

The NEPSE index fell by 11.10 points on Thursday, closing at 2,654.35. A total of 318 companies traded over 15.1 million shares, with a total turnover exceeding NPR 7.85 billion. Five companies hit the positive circuit breaker, while Saptakoshi Development Bank led the trading volume with NPR 308.9 million, followed by NRN Infrastructure and Development Company and United Mardi Hydro Power in second and third positions, respectively.

Market Analysis

After Wednesday's sharp rise of 52.36 points, Thursday saw profit-booking by short-term traders, which pressured the index. Historically, Nepal's stock market tends to dip the day after forming a Marubozu candle, and Thursday's correction aligned with this trend. Analysts attribute the market correction to selling pressure from short-term traders, deeming it a natural adjustment following a significant uptick.

The government's recently introduced ordinance and policy reforms have also contributed to heightened private-sector enthusiasm, which reflects in the market's broader sentiment. Despite minor corrections, the market remains optimistic for a rebound in the coming days. Analysts suggest that Sunday’s trading session will be pivotal in setting the tone for the market’s direction.

Intraday Market Movement

The market opened with an upward trend, climbing to 2,680 points within the first 25 minutes. By 11:37 AM, the index dropped to 2,663 points before bouncing back to 2,673 points at 11:50 AM. However, as the session progressed, selling pressure led to a gradual decline, closing the day with an 11-point loss.

Heatmap Insights

NEPSE Trading's AI-powered heatmap revealed diverse performances across sectors. Development Banks and Hydropower sectors emerged as the top performers, reflecting strong investor interest. The map also displayed a mix of buying and profit-booking behaviors among investors.

Technical Analysis

Technical analysts describe Thursday's decline as a natural correction following Wednesday's surge. Most indicators still show a "buy" signal, maintaining confidence in the market’s overall upward trend. User-generated charts on the NEPSE Trading platform highlight potential buying zones for stocks like Sikles Hydropower, which some users predict may rise to NPR 1,300. Similarly, users have identified Nirdhan Utthan Laghubitta and CHDC as promising stocks with clear buy signals.

Broker Analysis

An analysis of the top 10 brokers revealed that five were net buyers, while the other five were net sellers. Broker #58 led the trading volume with NPR 411 million in buys and NPR 522.3 million in sells. Similarly, Broker #45 recorded NPR 276.8 million in buys and NPR 287 million in sells. Broker #34 purchased stocks worth NPR 324.1 million while selling stocks worth NPR 284.5 million.

Stock-wise Broker Activity

• Broker #65 accounted for 68% of Excel Development Bank's total trades, buying 102,000 shares.

• Broker #41 purchased 42% of Saptakoshi Development Bank’s total trades.

• Broker #58 was responsible for 38% of CLI’s trades, while Broker #43 handled 38% of Sikles Hydropower’s trades.

• On the selling side, Broker #58 offloaded 61% of Sahas Urja, and Broker #28 sold 30% of HIDCL’s promoter shares.

Thursday’s market highlighted a balance of buying and selling activities, with notable interest in the Development Bank and Hydropower sectors. Despite the correction, market participants remain optimistic about a rebound fueled by favorable liquidity conditions and investor sentiment.