We are moving towards earnings season.

In the previous post "Bull vs. Bear", we had cited that market should make a turnaround within 2 weeks time, and after the gains witnessed in the past few days, we believe that the time for bull market has arrived. We are very positive for the days ahead as we move towards earnings season - listed below are specific points that we used to come up with such conclusion:

1. On Sunday, RSI (Nepse) stood at 31.79 as it neared over-sold zone. 
2. Nepse, with a bit of luck, stayed above its 200-day moving average. A fall below the line would have indicated bearish trend. It is now moving towards the resistance level of 501.51 points.
3. MACD line crossed above the signal line, and is nearing the 'zero' line - moving in positive direction. 
4. RSI had indicated over-sold conditions. Needed only minor good news to bring back buyers in the market.  
5. Tuesday and Wednesday witnessed major buying backed up by increasing volume.
6. Investors/traders had been offloading shares to meet debt obligations and margin calls. This trend appears to be slowing as fiscal year end nears.
7. BFIs have stopped providing share loans due to fiscal year ending soon. After the month of Ashad, share loans will again be available providing more liquidity into the market.
8. Mega Bank IPO drained huge amount of funds from secondary market. As the money comes back into the market next month, the 'bulls' should steam ahead. 
9. Ultimately, investors' focus will be on the earnings season - especially dividends. Earnings this year are expected to be the same as last year or slightly better. This will be the most important factor that will push the market ahead.

Though we are near to mid term bullish, investors need to watch for the strong resistance level at 501.51 points. If Nepse crosses above, it would provide additional justification to our bullish scenario. However, do expect minor volatility in the near term.

src: Jaguar Investments P. Ltd.