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1.1 Background of the Study

The world is dynamic and every moment can be a cause of change. The frame of the

change is being sketched in every moment and molding it in reality. In such

circumstances the business houses are facing a number of competitions as well as

challenges. To face the competitions and tackle the challenges the business houses

should make them strong in every sector and keep their houses in capable position.

Only then it becomes possible for the business houses to collect sufficient funds to

perform their any work. With the development of financial sector the corporate

business organization come front adopting various policies and strategies to enable the

investors to satisfy their diverse assets preference.

The state of efficient economy cannot be imagined without the support of

financial market of the respective nation .As per need the financial market creates

further capital and money market, and moreover tries to attain the co- ordination and

integration of them.

The development of capital market is very essential for the development of the

national economy. Development economy also demands the capital market

development, these two are interrelated. The development of the people living in the

society also depends upon the development of capital market. These three cannot be

separated from each other. So, there is essential of efficient capital markets. If that

country is to enjoy highest possible level of wealth, welfare and education for

population.

Capital market is the market place through which the entrepreneurs collect the

long term capital by mobilizing the individual and institutional savings either directly

or indirectly. It also plays the vital role in mobilizing a constant flow of saving and

channeling their financial resources for expanding productive capacity in the countries.

It helps economic development by mobilizing long-term capital, which is needed for

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productive sector. Therefore capital markets stands as skeleton of nations

development activities and also can be indicated as fertile-land for money to grow

more.

Financial Market is the place where the financial instruments like share, bond

and debenture are traded. "A financial market is a market for creation and exchange of

financial assets if you buy or sell financial assets, you will participate in financial

market in some way or other" (Pradhan, 2002). There are different types of financial

markets. Each market serves a different set of customer or deal with different types of

security. Transfer of capital between savers and those who need capital take place in

different ways like direct transfer, indirect transfer through investment banks and

through financial intermediaries. Investment has significant role for the well

development into two categories, real investment and financial investment. Keeping

these views into consideration this study focuses on trend analysis of stock market in

Nepal.

1.1.1 Security market.

Security Market interchangeably known as the integral part of capital market is in fact

basis of the economy of country. The most effective use of idle and surplus resources

can be brought into practice only by means of market mechanism. Security market, a

structural network of savers and users of fund, is such a market mechanism which

mobilized the fund of savers to the users and thus this financialization boosts the

industrialization and trading activities, which will bring the positive result to the

economy as a whole (Shrestha, 2017). There are two important functions of securities

market, namely the raising of funds in form of shares and debentures and trading in the

securities already issued by companies. While the finest aspect is obviously much more

important from the point of view of economic growth, the second aspects is also

considerably important. In fact, if facilities for transferring of existing securities are

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abundant, the raising of new capital is considered assisted as the buyer of a new issue

of security become confident that whenever he wants to get cash he can find a buyer of

the security without much difficulty. This aspect is called the liquidity of the stock

market. Thus the liquidity of the stock market affects the raising of new capital from

the market (Lovie, 1974). Security market sets a price for the securities it trades and

makes it easy for people to trade them. Securities market facilitates the sale and resale

of transferable securities. The security market can be defined as a mechanism for

bringing together buyer and sellers of financial assets to facilitate trading. Securities

market is classified into two: the market in which new securities are sold is called the

primary market and the market in which existing securities are resold is called the

secondary market. Secondary markets are created by brokers, dealers and market

makers. Brokers bring buyer and seller together with themselves actually buying or

selling: dealers set price at which they themselves are ready to buy and sell (bid and ask

price respectively). Broker and dealer come together organized market or in stock

exchange (Francis, 2013).

In simple sense, securities market is a place where people buy and sell financial

instruments. There, financial instruments may be in form of government bonds,

corporate bonds or debentures, ordinary share, preference shares etc. So far securities

market is concerned; it is an important constituent of capital market. It has a wide term

embracing the buyers and sellers and all the agencies and institutions that assist the sale

and resale of corporate securities. Although securities are concerned in few locations,

they refer more to mechanism rather than to pace designed to facilitate the exchange of

securities. This securities market can be defined as a mechanism for bringing together

buyers and sellers of financial assets in order to facilitate trading. In order to allocate

capital efficiently and maintain higher degree of liquidity in securities, the securities

market should be efficient enough in pricing the shares solely by economic

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considerations based on publicly available information.

An efficient market is one where current price of the shares gives the best

estimates of its true transferred from one to another a fair price through the organized

brokerage system. The major functions of securities market is to provide ready and

continuous market for purchases and sales of securities at competitive price thereby,

importing future market ability and liquidity. It is a medium through which scattered

savings and scarce resources and transferred to productive areas that ultimately help in

the economic development and industrialization of the nation.

A. Primary Market

Primary Markets denote the market mechanism for the original sale of securities by an

issuer to the public. It is the marketing which the securities are sold at the time of their

initial issuance. In other words, a market for a newly issued securities time of their

initial issuance is called primary market. Corporate bodies issue new securities in the

primary market. Securities available for the first time are offered through the primary

securities market. The issuer may be a brand new company or one that has been in

business for many years. The securities offered might be a new type for the issuer or

additional amount of security - used frequently in the past. The key is that these

securities absorb a new fund for the coffers of the issuers. All the securities whether in

the money market or capital market, are initially issued in the primary market. This is

the only market, in which the corporate or government issuer is directly involved in the

transaction and receives direct benefits from the issue, which is the company actually

receives the proceeds from the sale of securities.

B. Secondary Market

Secondary Market is the marketing which securities are traded that has been issued at

some previous point of time. In other words, where outstanding securities are traded is

referred to as the secondary market or more popularly known as the stock market.
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Share or stock market is a major component of securities market. Stock market is a

medium through which corporate sector mobilizes funds to finance productive projects

by issuing shares in the market. The efficient collection of small amounts of savings

and transferring funds into the competitive and efficient uses requires a well

functioning capital market to facilitate the process. Thus, secondary market deals with

previously issued shares mainly traded through stock exchange, over the counter

market or direct sealing. Secondary market in simple sense, are markets in which

existing, already outstanding securities are traded between investors. It is the market

that creates the price and allow for liquidity. If secondary market did not exist, the

investors would have no place to sell their assets. Without liquidity many people would

not invest at all. The corporations whose securities are being traded are not involve in

secondary market transactions and thus do not receive any funds from such a sale. The

function of secondary market is to provide liquidity for the securities purchased in the

primary market.

1.1.1.1 Organized securities exchanges.

Organized securities exchanges are the physical locations where trading of securities is

done under a set of rules and regulations. Investors usually purchase securities in the

secondary market by calling securities brokers. In the secondary market investors

buy and sell securities themselves the issuer never gets any cash flow from the trade.

Nepal stock exchange (NEPSE) is an example of organized stock exchange and this is

the only stock exchange in Nepal (Francis, 2013).

The stock exchange provides market in a wide range of traded securities,

generally of medium to long-term maturities, issued by companies, government and

public organizations (Yasawy, 1992). Most of the investors are attracted to the equity

shares because of its marketability and liquidity. One may like to buy more shares or

selling existing shares from time to time when he is in need of money or when he wants
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to shuffle his portfolio. Since the stock exchange is a place where a large number of

buyers and sellers congregate, one can, by and large, easily find his counterpart for sale

or purchase of shares. The investor can convert his shares into cash at the prevailing

market price readily. The existence of stock exchange facilitates all these functions

without which it is almost impossible to do so. The key function of securities exchange

is to create a continuous market for securities at a price that is not very different from

the price at which they were previously sold. The continuity of securities market

provides the liquidity necessary to attract investor's funds. Without exchanges,

investors might have to hold debt securities to maturity and equity securities

indefinitely. It is doubtful that many people would be willing to invest under such

conditions. A continuous market also reduces the volatility of security prices further

enhancing liquidity (Francis, 2013).

1.2 Statement of the Problem

Although Nepal's stock market has a trend towards an organized stock market after the

restoration of democracy in witnessed a large quantitative growth during past

199, there are still many challenges and complexities confronting by this sector.

Investors are losing confidence on the performance of share due to this experience of

fraudulent and scandalous activities undertaken by handful of market swindlers. The

large number of investor and general public are still unknown about financial market

which is the main problem in Nepalese capital market. Most of the investors are not

well known about what should be the price and what would be the price of stock. So,

investors are not rational and they are unable to get optimal benefit from their

investment. Due to greed for quick gain from the share market investors are becoming

more credulous and they are ready to follow even the wrong advice from the brokers.

At the same time there is no denial in the fact that investors too are responsible for not

having self control and self-judgment in the choice of securities for investment. Thus,
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having lack of adequate knowledge to investors, market disorders, price manipulation,

fraudulent share market activities etc. are all taken over together standing as barrier to

the development of Nepalese stock market.

Nepalese stock market is also characterized by a low trading, volume, absence

of professional brokers, early stage of growth, limited movement of share prices, and

limited information available to investors. Beside these, political instability and

interference, anti government activities, economic imbalances, ineffective

implementation of liberal economic policy, lack of suitable laws etc. are the burning

issues in Nepalese stock market. Due to lack of various required information, investors

are confused which stocks are bad and which stocks are good. They are haphazardly

investing in shares i.e. they are failure to ‘beat’ the right ‘time’ to purchase or sale the

securities.

The investment process is concerned with how an investor should go about

making decisions with regard to what marketable securities to invest in how extensive

the investment should be and when the investment should be made. The investors

whether they are small or professionals should analyze the securities in terms of price

and volume before investing on them. The main purpose of security analysis is to

examine whether the securities currently appear in the market to be mispriced.

Moreover, security analysis helps in forecasting future price movement in a way to

secure higher expected buy and hold return.

The technical analysis theory involves the study of past volume and price data

of the stocks to predict future price fluctuations. This approach numerical series

generated by market activity such as price and value are uses to predict share price

trends. Thus technical analysis does not try to analyze the financial data of a company

such as cash flow, dividends and projection of future dividends. That type of analysis id

called fundamental analysis. Nor does Technical analysis claim to be hundred percent
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accurate, it attempts to give the "most likely" outcome.

The premises of technical analysis were derived from empirical observations of

financial markets over hundred years. Perhaps the oldest branch of technical analysis is

the use of candlestick techniques by Japanese traders at least as early as the 18th

century, and still very popular today. Thus the technical analysis theory of share price

behavior is based on past market information to predict future prices fluctuation This

approach studies various graph and charts of the past share prices and reduce fro m the

analysis about the future pattern. The chartists seek to predict future movement by

seeking to interpret past pattern on the assumptions that history tends to repeat itself. It

is believed that a knowledge of past patterns of share prices help to predict future share

prices under similar circumstances. Dow Theory, moving average analysis, advanced

decline index, client account position, oscillators, chart patterns etc. are the tools uses

to forecast the future share prices movement.

There are only limited researches on predictability of stock price in NEPSE

using technical analysis. Technical and fundamental analysis models are most

appropriate models to evaluate the prices of shares in our context. Therefore here

researcher main concern is about technical analysis and efficient market theory. This

study also puts an effort to improve on shortcoming of limited past studies in the hope

that the trends of future share piece can be predicted using technical analysis.

The study mainly deals with following research questions:

 What is the state of technical analysis in Nepal’s stock market?

 Whether there possibility to predict future market trends on the basis of

identified market trends?

 Whether Technical Analysis of Nepalese stock market helps investors to reach

best investment decision about common stock?

 Which one efficiency theory is adopted in Nepalese stock market?

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1.3 Objectives of the Study

The prime objective of this study is to analyze the trends in NEPSE using technical

tools. Within the periphery of above stated problems, the objective of the study is to

analyze 'technically' the movement in NEPSE. Furthermore, this study is proposed to

meet the following objectives:

 To predict the trends and patterns of NEPSE movement.

 To explore the potentiality of technical analysis in Nepalese stock market.

 To examine the efficiency of Nepal’s stock market through qualitative test.

1.4 Significance of the Study

Technical analysis is one of the crucial factors for general investors. This research will

be significant for the following ways:

 This study guided investor to get right decision for investment on right Place at

right time therefore it is expected to helpful for the general investor and

stakeholders.

 The study may draw the attraction from every corner of entrepreneurs and

investors and other academicians and also other interested parties.

 This study is extremely helpful to the financial managers of corporate firms to

know about the movement and price formation of stock price.

 This study is very useful to potential investors who are interested to know the

effect of price trend, volume of stock and impact of signaling factors in NEPSE

index.

1.5 Review of Literature

The basic concern of the study is to focus on an application of technical analysis tools

in Nepalese stock market. In this chapter some of theories related to technical analysis

of stock market will be reviewed. It includes literature regarding theories on the topic
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and review of the empirical evidence of previous studies done before within and

outside the country. The first part of the review will be focused on description of the

theories of technical analysis and stock market behavior, which will be reviewed from

different books and articles. The theory will include fundamental analysis and efficient

market theories. The second part of the studies will be focused on reviewing the past

research and findings regarding the same topic. Better understanding of technical

analysis and its application in stock market may increase investor's confidence in stock

market and thereby enhance the effectiveness of corporate resource allocation.

1.5.1 Conceptual review.

1.5.1.1 Technical analysis theory.

Technical analysis of the security prices involves the study of market price in an

attempt to predict the future price movement. It is alternative theory of predicting the

market price of share in stock market it is market oriented theory based on force of

demand and supply. The share price is reflected in the action of market especially past

market rather than the intrinsic value of share. The analyses who analyze the security

behavior of past movement to predict the future price of share, is known as technical

analysis or technicians.

Technical analysts focus most of their attention on the charts of security market

prices and on related summary statistics about security transactions. Therefore technical

analysts are called chartists. Most technical analysts prepare and study the charts of

various financial variables in order to make forecasts about security prices

Technical analysis is the 90 percent psychological and 10 percent logical, which

means market is driven by psychology of investors in 90% of the times and in 10% of

the times logical factors affect the market.

It is based on the belief that history repeats itself, which means price patterns

and traded volume occurs again and again over a period of time. This repetition of price
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and volume pattern helps in predicting near future price movements (Khatri, 2006).

Technician analyzes the past data and then reach conclusion of coming future.

The technician believes the forces of supply and demand are reflected in patterns of

price and volume of trading. By examination of these patterns, he predicts whether

prices are moving higher or lower and even by how much Therefore, the past behavior

in market prices is the basic of technical analysis Trend analysis of past prices is major

focus of this analysis to determine whether prices are likely to rise or fall. Looking

backward is the false of technicians. The technician usually attempts to predict short-

term price movements and thus makes recommendations concerning the timing of

purchases and sales of either specific stock or groups of stocks (such as industries) or

stocks in general. It is sometimes said that fundamental analysis is designed to answer

the question "What?" and technical analysis to answer the question "When?" (Sharpe,

Alexander and Bailley, 2001).

Past behavior of stock market, which may be self-repeat in future is main slogan

of technical analysis. Technicians recommend for short term on the basic of history for

profitable investment. "Technical analysis is the study of stock exchange information as

such. The world 'technical' implies a study of market itself and not of those external

factors, which are reflecting in the market, relevant factors, whatever they may be, can

be reduced to the volume of stock exchange transactions and the level of share prices;

or more generally to the sum of the statistical information produced by the market"

(Pistolese, 2014).

Technical analysts maintain that the price of a share at any time (Present price)

is the balance struck by buyers and sellers at a point in time. Price movements take

place because of changes in buying and selling pressures. This occurs in account of

diverse internal and external factors (profit, political environment, predictions and the

likes). Price stabilizes when equilibrium between buyers and sellers achieved. They
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believe that a record of price movements over a period depicts how investors (both

buyers and sellers) have acted and behaved over a period in the past as the whole theory

is based on the assumptions that history repeats itself. That human nature doesn't

change and that man is likely to repeat his pattern of past behavior in the future, it is

believed that this record of past movements call repeat themselves in the future.

Estimation of price of stock is task of technical analysts rather than value.

Technicians totally ignored the fundamental facts of stock market such as risk and

earnings growth rates. Technical analysis focuses on demand and supply and

determines the future price on the basic of that behavior. "The methodology of

technical analysis…. Rests upon the assumption that history tends to repeat itself in the

stock exchange. If a certain pattern of activity has in the past produced certain results

nine times out of ten, one can assume a strong likelihood of the same outcome when

ever this pattern appears in the future" (Cowdell, 2012).

Basic Assumptions of Technical Analysis

Edwards and Magee has mentioned the following basic assumptions underlying

technical analysis are as under" (Bhalla, 1983).

 Market value is determines solely by interaction of supply and demand.

 Supply and demand are governed by many rational and irrational factors.

 In disregard of minor fluctuations in the stock market, share price tends to move

in trends, which persist for an applicable length of time.

 Change in trend is resulted by shifts in supply and demand.

 Shifts in supply and demand, no matter why they occur can be detected

eventually in charts of market action.

 Some chart patterns tend to repeat themselves.

In essence, technical analysis believe that past behavior of stock market will repeat in
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future and can therefore be used for predictive purposes at last technical analysis

involves short-term predictions of security price movements based on past patterns of

price and trading volumes.

1.5.1.2 Types of charts.

Technical analyst make the prediction about near future after making a study of price

and volume data as plotted on any of the following typed of charts:

 Line charts

 Bar diagrams

 Point and figure charts

 Candle charts

Line Charts

Line charts are charts in which various prices either of particular day or across the days

are plotted on the graph and then these are joined with the help of a line in the

chronological order. A simple line indicated the movement of price and volume over a

period of time. These are most commonly used charts. Various movements like

support, resistance, up-trend, downtrend, etc. can easily be identified in these.

Bar Diagrams

Bar diagrams are charts which provide details about the four prices prevailing for a day

for one particular share, i.e. highest, lowest, opening and closing price of a day.

Point and Figure Charts

In this type of chart each price of a particular day for the individual share is potted on a

graph. The upward price movements are shown by "*" and a downward movement is

shown by '0'. Date for which prices have been shown is also placed at the end of all the

prices of the concerned day.

Candle Chart
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In the candle chart a thick bar called a candle is drawn in the chart. The upper edge of

the candle indicates high price and lower edge of the candle indicates the low price of

the day. Candle is left blank to show an upward movement during the day, whereas it is

darkened when price have move downside.

1.5.1.3 Uses of technical analysis.

Technical analysis is used for different purposes like predicating overall market trend

as well as making prediction about individual shares. For both of these separate types

of tools are used (Khatri, 2006).

 Tools to predict overall market trends.

 Tools to predict for individual shares trends.

 Tools to Predict Overall Market Trends

Prediction about the overall market is based on the movement of an index representing

the trend of the market. An index is considered to be representative of the market

because it is calculated by considering the shares which have the following features.

Minimum Impact Cost

 High value representation in market capitalization

 Large number of traders per day.

 Large traded volume per day.

 Frequent trades on every day.

Following are the tools for the analysis of predicting overall market trends:

 Dow Theory

 Advance Decline Index.

 Client Account Position

Dow Theory

The Dow Theory is one of the oldest and most famous technical tools; it was originated
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by Charles Dow, founder of the Dow Jones Company and editor of the wall street

Journal around 1900. Mr. Dow died in 1902, and the Dow Theory was developed

further and given its name by staff members at wall street journal. Today, many

versions of the theory exist and are used: it is the basis for much of the work done by

technical analysts.

The Dow Theory is used to delineate trends in the market as a whole or

individuals securities. According to Mr. Dow "The market is always considered as

having three movements, all going at the same time. The first is the narrow movements

from day to day. The second is the short swing, running from two weeks to a month or

more, the third is the main movements covering at least 4 years in duration." According

to Dow that share prices show three kinds of price movements all moving at the same

time: daily movements Secondary movements and primary movements. Primary move

last from a few months to many years and represent the broad underlying trend of the

market. Secondary movements last from a few weeks to a few months and move

counter to the primary trend. Daily movements can move with or against the primary

trend and last a few hours to a few days, but usually not more than a week. They are

explained as follows (Fama, 2005).

Daily Movements

Daily movements, while important when viewed as a group, can be dangerous and

unreliable individually. Due to the randomness of the movements from day to day, the

forecasting value of daily fluctuations is limited at best. The worst, too much emphasis

on daily fluctuation will lead to forecasting errors and possibly tossed. Getting too

caught up on the movement of one or two days can lead to nasty decisions that based

on emotion. It is vitally important to keep the whole picture in mind when analyzing

daily price movements. Think of the pieces of puzzle. Individually, a few pieces are

meaningless, yet at the same time they are essential to complete the picture. Daily price
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movements are important, but only when grouped with other days to form a pattern for

analysis. The study of daily price action can add valuable insight, but only when taken

in context of the larger picture. There is little structure in one, two or even three days

"worth of price action. However, when a series of days is combined, a structure will

start to emerge and analysts became better grounded.

Secondary Movements

Secondary movements run counter to the primary trend and are reactionary in nature. In

a bull market a secondary move is considered a correlation. In a bear market, secondary

moves are sometimes called reaction rallies.

Primary Movements

Primary movements represent the broad underlying trend of the market and can last

from a few months to many years. These movements are typically referred to a bull and

bear markets. Once the primary trend has been identified, it will remain in effect until

proved otherwise. According to the William Hamilton, refiner of Dow John theory,

length and the duration of the trend were largely indeterminable and he warned against

attempting to apply these as rules for forecasting.

The reality of the situation is that nobody knows where and when the primary

trend will end. But the objective of Dow John Theory is to utilize what we do know,

not to haphazardly guess about what we don't know. Through a set of guidelines Dow

Theory enables investors to identify the primary trend and invest accordingly.

1.6 Research Methodology

Research methodology describes the methods and process applied in the entire aspect

of the study .In other words research methodology is a systematize way to solve the

research problem. Research methodology refers to the various sequential steps (along

with a rational, of each step) to be adopted by a researcher in studying a problem with

certain object in view (Wolf & Pant, 2005). A focus is given to research design, sample
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selection and size, data collection procedure, data processing, definition of variables,

meaning and definition of statistical tools used. This chapter highlights the research

methodology used for the study. In order to draw inference on security analysis

especially through the technical analysis approach in Nepal Stock Exchange, the

different measures have been adopted while collecting and interpreting the relevant

data, facts and figures.

1.6.1 Research design.

A research design is a plan, structure, and strategy to obtain the objectives of the study.

The research is based on the secondary as well as primary data and information. Hence,

the explanatory or descriptive as well as analytical research design has been used. As

the title of the study connotes the analysis of common stock, it is carried on to get the

empirical results of stock price movements. Therefore, while conducting this study,

descriptive as well as analytical approach is followed. The variables related with the

performance of the company, market information and relevant subjects are included in

the study. Descriptive approach is utilized for conceptualization, problem identification

conclusion and recommendation of the research. On the other hand, analytical approach

is adopted for the parametric and non- parametric test of the data.

1.6.2 Population and sample.

There are altogether 2048 listed companies from 9 different sectors at the end of the

fiscal year 2017/2018. Commercial banks, development banks, finance companies,

manufacturing and processing companies, hotels, trading, insurances, hydropower,

others. The research period is undertaken in this study is of 280 days daily sub index

data. The share transaction of commercial banks usually controls over 70% of the total

transaction at NEPSE, any fluctuation in its price easily reflects the behavior of market.

Greater samples are closer to actual result so in order to reflect real pictures

from the analysis this study tries to take more than 50 percent samples from population.
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Thus out of population these 5 major sectors are selected as sample of the study.

1. Banking

2. Development bank

3. Finance companies

4. Insurance companies

5. Others

1.6.3 Data collection procedure.

In Nepalese context, due to the lack of information and poor knowledge, potential

investor is manipulated or exploited by the brokers, financial institution, company and

other market intermediaries. Actually the research study, technical analysis related with

share price movements. All the information related to the stock prices are taken from

NEPSE. Thus, in order to make the study more reliable coherent and convenience both

primary and secondary sources have been applied here while collecting data, facts and

statistics. So brokers, investors, experts are taken as a population and from the

population brokers, experts and investors as well as the official of the companies are

taken as sample.

1.6.4 Nature and sources of data.

The major sources of secondary data are trading reports, official records and other

relevant publications of Nepal Stock Exchange and Security Board of Nepal and web

site of this organization. The main sources of primary data are questionnaire and

interview and discussion. Interviews are making with a number of potential investors

whose shares investment available in different companies to obtain their opinion and

views regarding the present and future situation of stock market. Other related different

statistical and financial tools are used.

1.6.5 Data analysis tools.

To analyze the collected data many statistical and non- statistical tools can be used.
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Among the different tools in the field of technical analysis, some of the commonly used

tools chart diagrams, high & lows, confidence index, Breath of market, trading volume,

and moving average are used. Since all of these tools are not very relevant to the

Nepalese context due to lack of sophisticated computer software packages and

complexity of applications. So the study focused only simple type tools moving

average and bar diagrams are used for the presenting and analyzing data.

Moving Average Analysis

Moving Average is one of the most popular and easy to use tools available to the

technical analyst. They smooth a data series and make it easier to spot trends,

something that is especially helpful in volatile markets. They also form the buildings

blocks for many other technical indicators and overlays. There are mainly two most

popular types moving averages: Simple Moving Average (SMA) and the Exponential

Moving Average (EMA). This study is heavily dependent upon moving average.

Bar- diagrams

Diagrams are visual aids which give a bird’s eye view of a set of numerical data which

show the information in a way that enables us to make comparison between two or

more than two sets of data. Diagrams are in different types. Out of these various types

of diagram one of the most important forms of diagrammatic presentation of data is

simple bar diagram which is used in cases where single characteristics of the set of data

have to be presented and compared.

1.7 Limitations of the Study

Research is the dynamic process of searching something to find out the solution of a

problem. The findings might not be equally applicable to all the problems, every

research has some limitations. A single research cannot be perfect in itself. The present

research too cannot be an exception. This study may face the following limitations

during the course of research.

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 This research mainly based primary and secondary data which have been

collected from questioners, interviews, books, journals, financial statements,

report of Securities Board Nepal (SEBON) and Nepal Stock Exchange

(NEPSE), annual reports of companies, web sites and other publications.

 The study heavily focus on the technical analysis of Nepalese stock market

 Studies and reference were also extremely limited in the prospective of

Nepalese stock market.

 The market price of shares also get affected by happening on the political and

economic factors or fundamentals of the company, i.e. changes in an intrinsic

value of share, hence all the deviations cannot represent the market sentiments.

1.8 Organization of the Study

The study is divided and organized in the following chapters.

Chapter-I: Introduction

Introductory framework of the study that contains general background, statement of the

problem, focus of the study, objective of the study and limitation of the study, includes

in this chapter.

Chapter-II: Review of Literature

It deals with the review and analysis of available relevant published materials including

unpublished thesis, journals, books, dissertations and government publications.

Chapter -III: Research Methodology

This chapter includes the research design, data collection procedure, tools for analysis

and methods and procedure of data analysis and presentation.

Chapter -IV: Presentation and Analysis of Data

The application of defined research method on the collected data and information are

organized in this chapter. The generated result then will be analyzed and interpreted.

This is very important part of the study.

 21

Chapter -V: Summary, Conclusions and Recommendations

This final chapter summarizes the findings in a ground of result obtained from data

presentation and analysis and further presents the concluding remarks with a suggestive

package as recommendation.

1.9 Time Frame

This table shows the activities performed and time taken to finish the report. The

preparation of this report was started in 23th February, 2019 and is expected to finish in

23rd April, 2019.

Table 1.1: Time allocation for completion of the report

Activities performed Time allocated

Topic finalized 1 week
Study on introduction 1 week
Study on literature reviews 1 week
Study on research methodology 1 week
Data collection 1 week
Data entry and interpretation 1 week
Preparation of the report 2 weeks

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