Technical Analysis 1. Market Summary (as of Aug 29, 2014)

Nepse at close last week (Aug 28, 2014) 972.17

Nepse high last week (Aug 24, 2014) 985.45

Weekly Change - 25.96 (or - 2.60 %)

Daily Volume (Avg.) NPR 50.56 crores

Total Traded Amount (weekly) NPR 2.53 billion

Immediate Resistance 998.13

Immediate Support 917.58

RSI 41.52

MACD Line -16.25

Signal Line -5.35

2. Market Trend

Nepse (Jan 01, 2014 – Aug 28, 2014)

The news from Nepal Rastra Bank regarding limitation on BFIs to invest in the secondary market remained the main driver influencing the market this week. Confusion created through NRB’s statement caused panic selling among the investors until Tuesday as Nepse declined to 922.20 points. However, the market recovered during the last two days as Nepse closed at 972.17 points, a decline of 25.96 points (or -2.60%) from the week before. The Nepse line crossed below the 50-day moving average during the first hour on Sunday signaling a short term sell trigger in the market. Since then, the market declined by -7.61% in the following days. Though the market recovered during the last two trading days, it is still well below the 50-day moving average. Market volume remained very

low early in the week, but it gradually increased as the week progressed. On average, investors traded NPR 50.56 crores each day. For Nepse to get back to its path of bullish trend, it needs to cross above the 50-day moving average and maintain above that line.

3. RSI RSI is a form of leading indicator that is believed to be most effective during periods of sideways movement. Such indicators may create numerous buy and sell signals that are useful when the market is not clearly trending upwards or downwards. This past week, the RSI indicator accelerated in the downward direction as it fell well below 30 levels and reached the oversold zone. On Tuesday, it reached 22.50 levels, which is one of the lowest points in recent times. This had indicated highly oversold conditions in the market. However, by the close of the week, RSI stood at 41.52 levels

RSI (Dec 01, 2013 –Aug 28, 2014)

4. MACD The MACD is a momentum oscillator formed by using two different types of moving averages, which provides specific buying or selling signals. When a MACD line crosses above the signal line, it is considered to be a positive sign and indicates a time to buy, and vice-versa. The MACD indicator nosedived this week as the momentum accelerated at a greater pace. By the end of the week, the MACD line and Signal line closed at -16.25 and -5.35 points respectively. This shows that there has been greater selling pressure in recent times.

MACD (Dec 01, 2013 – Aug 28, 2014)

5. Bollinger Bands

The Bollinger Band is a technical indicator that consists of a moving average (21-day) along with two trading bands above (upper band) and below it (lower band). The bands are an indication of volatility, which are represented by calculating standard deviation. The Nepse line crossed well below the lower band this week due to higher selling pressure in the market. This represented highly oversold conditions during the middle of the week causing investors to jump back into the market which resulted in rising volume. The upper and lower bands are still wide suggesting high volatility in the market.

Bollinger Bands (Dec 01, 2013 – Aug 28, 2014)

Overview: Due to negative market sentiment, Nepse faced another weekly loss for the fifth time in a row. Though the comments by NRB created panic among investors early in the week, the fear subsided after the central bank made clarifications regarding investment limits for BFIs. By the end of the week, Nepse closed at 972.17 points, a decline of 25.96 points (or -2.60%) from the week before. As the week moved along, the market witnessed an increasing trend in volume. Earlier this week, Nepse crossed below its 50-day moving average signaling a correction in the market. Since Nepse made a top of 1083.55 points on July 21, 2014, Nepse fell by a total of 161.35 points (or -14.89%) by Aug 26, 2014. The RSI is currently maintaining at 41.52 levels above the oversold zone. The MACD still indicates a downward momentum as it is well below the zero line. This also represents oversold condition in the market. The Bollinger Bands also suggest that the market has been oversold in recent times. Overall, Nepse is still maintaining above its 200-day moving average, however, the volume needs to be sustained for the market to climb to higher levels.

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Nepse (Jan 01, 2014 – August 28, 2014)

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RSI (Jan 01, 2013 – August 28, 2014)

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MACD (Jan 01, 2013 – August 28, 2014)

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Bollinger Bands (Jan 01, 2013 – August 28, 2014)

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