TECHNICAL ANALYSIS AND INVESTMENT DECISION MAKING IN NEPALI STOCK MARKET

Abstract

This study explores the technical analysis in investment decision-making among Nepali investors, addressing the effectiveness and applicability of technical analysis in the Nepali Stock Market. It identifies key challenges such as the contradiction with the Efficient Market Hypothesis (EMH), cognitive biases, and issues with data availability. The primary objective is to investigate how technical analysis influences investment decisions and its practical relevance in the Nepali context. The research employs a quantitative approach with a causal effect design. Data were collected from a sample of 400 individual investors in the Kathmandu Valley, selected through convenience sampling. A structured questionnaire using a five-point Likert scale served as the primary instrument for gathering data, focusing on investors' behaviors and perceptions regarding technical analysis. Statistical analysis was conducted using Microsoft Excel and SPSS, with tools including descriptive statistics, correlation analysis, and multivariate regression models. The research framework examines key independent variables—education, experience, time horizon, trading frequency, accessibility of information, and perception of investor—against the dependent variable of investment decision-making. The findings reveal that experience, perception of investor, and accessibility of information significantly impact investment decision-making, with experience and perception being particularly influential. Education, time horizon, and trading frequency show weaker and less significant effects. These results highlight the crucial investor expertise, favorable perceptions, and access to information in enhancing decision-making. The study underscores the practical value of technical analysis for investors, recommending an increased focus on education, better access to market data, and the need for further research on additional variables. Insights suggest that while experience and perception are pivotal, education and trading frequency play a lesser role.