NEPSE Probable Scenario!!

In technical analysis we say history repeat itself let’s see how did NEPSE moved previously from the monthly aspect. On July 2008, NEPSE made a high of 1175.38 and declined to 292 on June 2011(Data taken form SS Pro). On Jan 2016, market breakout the previous high of 1175.38 and made another high of 1888.36 on July 2016. Market retested the area of 1175 on Feb 2019 after breakout of 1888.36 on Nov 20 and made a record of all time high of 3226.89 on Aug 2021. Similarly, market is near to retest the level of 1888.36 and can create another all-time high on the coming days. 

Whenever the market retest on the very first time in the support zone similarly what happened on Feb 2019, there is high probability of market taking a good upside move but that does not mean market must bounce back at that very level. But we can take an entry position with stop loss which is very important thing when we take technical analysis as a tool for trading purpose. 

Retest area is 1880 -2000 which is also the psychological level where trades and investors might react. 

INVESTMENT IN STOCK MARKET IS SUBJECT TO RISK.BEFORE TAKING ANY POSITION CONSULT YOUR FINANCIAL ADVISER OR DO YOUR OWN RESRARCH.ANY PROFIT OR LOSSES GENERATED FROM THIS IS SOLELY FROM YOUR DECISON.

NEPSE Update Jul 30

Day time frame 

Currently market is in the supply area and profit booking can be expected in tomorrow's market. The market has formed ascending triangle which is bullish pattern. 

Scenario 1: If the market breaks the level of 2160 and stays above it will create another buy signal with a stop loss below the trend line. The pattern will be invalidated only after it falls below the trend line. Ascending triangle pattern leads to the target around 2480-2500 but before that we can see minor resistance around 2350-2390. 

Scenario 2: Wait for market to be near trend line for new buy signal.

Dow Theory Basis 

If the market closes above 2145 market will change its trend and series of HH and HL will be formed which indicates bullish trend. Until this series continues, we can say market is bullish on daily basis.

Monthly Time Frame 

With only 1 day left for the month to end we can see a good green candle in this month with buying pressure and almost no selling pressure in this month as on today. Previous analysis continues on monthly frame. 

NEPSE update July 23

NEPSE SCENARIO ON A DAILY BASIS

Scenario 1

Break out of 2065 with above volume average without facing larger selling pressure will trigger a buy call.

Scenario 2

Green candle in the trend line area with the above average volume will trigger a buy call with stop loss below 1908-1900.

INVESTMENT IN STOCK MARKET IS SUBJECT TO RISK.BEFORE TAKING ANY POSITION CONSULT YOUR FINANCIAL ADVISER OR DO YOUR OWN RESEARCH. ANY PROFIT OR LOSSES GENERATED FROM THIS IS SOLELY FROM YOUR DECISION.

NEPSE on dow theory basis 

NEPSE scenario on monthly basis. 

In technical analysis we say history repeat itself let’s see how did NEPSE moved previously from the monthly aspect. On July 2008, NEPSE made a high of 1175.38 and declined to 292 on June 2011(Data taken form SS Pro). On Jan 2016, market breakout the previous high of 1175.38 and made another high of 1888.36 on July 2016. Market retested the area of 1175 on Feb 2019 after breakout of 1888.36 on Nov 20 and made a record of all time high of 3226.89 on Aug 2021. Similarly, market is near to retest the level of 1888.36 and can create another all-time high on the coming days. 

Whenever the market retest on the very first time in the support zone similarly what happened on Feb 2019, there is high probability of market taking a good upside move but that does not mean market must bounce back at that very level. But we can take an entry position with stop loss which is very important thing when we take technical analysis as a tool for trading purpose. 

Retest area is 1880 -2000 which is also the psychological level where trades and investors might react. 

INVESTMENT IN STOCK MARKET IS SUBJECT TO RISK.BEFORE TAKING ANY POSITION CONSULT YOUR FINANCIAL ADVISER OR DO YOUR OWN RESEARCH. ANY PROFIT OR LOSSES GENERATED FROM THIS IS SOLELY FROM YOUR DECISION.

Did NEPSE change its minor trend from bearish to bullish??

No, still there is conformation pending for NEPSE to called its minor trend as bullish. Though the quick trade was possible after NEPSE formed a perfect hammer candle stick pattern on 8th may in a daily time frame followed by w pattern break out on 9th may at 12 p.m. in an hourly basis candle but we should also keep in mind that lower the time frame higher the chances of false signal.

Market is said to be in bullish until and unless market makes the series of higher high and higher low which is still pending in the market.

For market to change its trend from bearish to bullish in a minor trend market need to protects 2200 level for now and should make series of higher high and higher low.

BANKING INDEX 

Banking index alone holds around 36% of weightage in NEPSE which means it has higher impact on NEPSE. Banking index formed an engulfing candle stick pattern on weekly time frame which indicates the reversal in the market but candlestick alone cannot determine the reversal in the market, volume also plays an important role. Volume is slightly greater in banking index compared to last week but its below 20-day average volume.

What next now? 

Whoever looking for taking new position enter on breakout of 2390-2400 stop loss being at swing low for now i.e., is currently 2200.

Strategies for Stock Trading: Averaging Down or Pyramiding?

Averaging down means buying more of a stock as its price falls, aiming to lower the average cost. This is done to reduce the weighted average cost of capital (WACC). On the other hand, pyramiding involves adding to a position as prices rise, also known as averaging up. The key is to start a position, make incremental purchases in a downtrend (averaging down), or in an uptrend (averaging up) until a set limit or a maximum investment is reached. 

However, many people make the mistake of averaging down when prices are falling, going against the trend. It's crucial to follow the trend, as the saying goes, "the trend is your friend." Buying when prices are decreasing increases the risk of losses because there's no certainty that the price will turn around. Instead, it's better to buy when prices are increasing, following the trend, even if it goes against the notion of buying low and selling high. 

People often fear buying stocks when prices are rising due to the fear of a potential fall. However, buying high and selling higher can be a successful strategy. The key is not to trade against the trend. Pyramiding works well in a trending market, but identifying the right points to add to a position can be challenging. 

Averaging down can lead to greater profits in certain circumstances, but it's essential to distinguish between a stock's individual event and a broader market correction. For this strategy to work, the company should have good performance, minimal debt, and a growing cash flow. 

Ultimately, once in a trade, if it moves in your favor, the probability of success is higher, while immediate movement against you increases the likelihood of failure.

Is Stock Market Investing a Zero-Sum Game?

We often hear that the stock market is a zero-sum game and that makes sense at first glance. If someone makes money in the stock market, does that means someone else is going to lose money? So, the question immediately arises, is the stock market really a zero-sum game?

What is a zero-sum game?

A zero-sum game is a situation where one's profit equals one's loss, so the difference in wealth is zero. So, if you and your friend bet on a coin toss, it becomes a zero-sum game. If you win, your friend loses, and if you lose, your friend wins. Some well-known examples of zero sum games are poker and gambling. The same can be said about casinos and gamblers. If the casino wins, the players lose, and if the player wins, the casino loses. The name "zero-sum" games reflect the fact that if the winner's earnings were added to the loser's losses, the total would equal zero at the end of the game. As a result, one of the distinguishing characteristics of a zero-sum game is that someone must lose in order for someone to win.

Is stock market investing a Zero-sum game?

When it comes to the stock market, the vast majority believes it is a zero-sum game. After all, money earned by someone must come from somewhere, and most people feel it comes from the other loser. However, this is not true. Investing in stock can be mutually beneficial. Because of the varied risk tolerances of the participants, trades in the stock market are dependent on future expectations. Someone selling his stock does not necessarily indicate he is losing money. He might have made a lot of money and was eager to book it. Similarly, if one investor sells, there's no reason to believe the next investment won't profit as well. Both parties have a chance to win in this situation.

Let’s take few real-life example:

Mr. X bought a stock of XYZ company when it was trading at 500 rupees. When the stock ran up to 1000, he decided to sell his shares and the buyer of those shares was Mr. Y. Now, Mr. Y was just as patient as Mr. X and saw XYZ’s shares soaring to 1500 rupees. So, he decides to sell the shares at 1500 rupees. And this goes on and on.

So, in this story, who’s the loser? Well, nobody. Everybody is a winner in this stock as long as XYZ’s growth story continues.

Overall, a zero-sum game isn’t the right description of investing. As the company expands and becomes more valuable, the stock market can increase the wealth of both the participants & economy over time.Dividends are an essential component that is frequently overlooked when viewing the stock market as a zero-sum game. Corporations earn profits from sales and distribute a portion of those profits to shareholders in the form of dividends. If the market were a closed system with only buyers and sellers, it might be thought of as a zero-sum game. It is not, however, a closed system because firms continue to pour money into it as dividends. The classic mistake people make is that they think that shares of a company are just the same as a coin in the coin toss or those chips in the casinos and that’s where the whole confusion starts. The reality is that a company’s stock is very much a living, breathing entity. It can bring more money in the market or it can suck money from the market depending on the company’s financial performance.

So, the answer is no. The stock market is not a zero-sum game. It can be a positive-sum game for investors of good stocks and a negative-sum game for investors of bad stocks. 

There is a zero-sum game also in the stock market and that is in derivatives, i.e., futures and options.

LIST OF IPOs ISSUED IN 2021 AND THEIR VALUES AT THE END OF 2021

Altogether 19 companies issued IPO and traded in 2021.Among 19 listed companies, NIFRA applicant got minimum 50 units and remaining applicant got only 10 units on lottery basis. The list of 19 companies with the initial investment amount and their values at the end of 2021 are mentioned below:

If we had been allotted every IPOs then the worth at the end of 2021 would be Rs 1,98,012 with an initial investment of Rs 23000 which is 760.92 % in return. PS All applicant were not allotted with every IPOs.I personally got allotted 9 IPOs using 4 demat account of my family members and it’s worth at the end of the year 2021 is Rs 90,312 with an initial investment of Rs13,000 which is 594.71% in return.

START INVESTING RATHER THAN REGRETTING