Can the market u-turn after near 2440? Detailed analysis

The Nepal stock market had trading every day this week. Out of five trading days, the market fell on four days and only rose on one. The NEPSE index, which closed at 2,582 points last week, ended this week at 2,487.17 points, dropping 95.01 points in total.

Last week also saw a fall of 81.53 points. This week, the total trading volume reached Rs 21.42 billion, compared to Rs 15 billion in three trading days last week. As the market fell, the total market capitalization also dropped from Rs 4.316 trillion to Rs 4.157 trillion, a decline of Rs 159 billion.

What is smart money analysis?

Smart money refers to investments by big institutions like banks, hedge funds, and market makers, compared to retail investors. These investors follow market trends closely and plan when to enter or exit based on market structure.

For example, if a bullish trend appears, they invest, and if a bearish trend continues, they may exit to avoid losses. This helps protect other investors from bigger drops.

Current market outlook

Looking at smart money trends, the market has been showing a continuous bearish pattern since it fell from 3,000 points. Technically, to predict how far this downtrend may go, analysts check support and resistance levels.

• The NEPSE index closed this week at 2,487 points.
• The nearest support is at 2,480 points.
• If the decline continues, the next support is around 2,440 points.

There is no guarantee that these levels will hold, but given the low trading activity, they could act as temporary supports. The market has not yet shown a bullish reversal.

Technical indicators

• Bollinger Bands show the market at a lower level in a downtrend.
• MACD shows a valid bearish crossover, with a negative and widening histogram.
• RSI is near 33, in the oversold zone.

Overall, technical indicators point to a downtrend.

Pivot points

Resistance levels:

• R3: 2,802
• R2: 2,739
• R1: 2,661

Pivot: 2,598

Support levels:

• S1: 2,591
• S2: 2,456
• S3: 2,377

Summary

The market has fallen sharply in the last two weeks, showing continuous selling pressure after Dashain. Despite positive fundamentals, political uncertainty, including the unclear election schedule announced for Falgun 21, has impacted the market.

Investors are uncertain about the post-Tihar political scenario. This makes a major market recovery unlikely in the immediate term.

However, technically, the market is approaching strong support zones. With increasing liquidity and falling interest rates, the market could potentially turn around near 2,440 points, similar to the pattern seen during the COVID market period.

Note: Stock market investments are risky. This analysis is for informational purposes and is not a trading recommendation.