Should you invest in NEPSE? Future of Nepal Share Market? Make profit above 50%

Published by Neelima Pradhan on

Nepal’s share market (NEPSE) is a topic that everyone knows or even just heard about in their daily life. The interest of people in the share market is remarkably increasing day by day. You can hear people talking about shares and the share market or even the stock market and how much was allotted and all well simply starting with what share is. Not to mention how curious and attentive people are nowadays about shares, which share should we fill up for, and how many shares the other person own.

WHAT IS A SHARE?

A share is a unit of ownership or equity ownership of the company. Buying or selling a certain share of the company gives you the certainty of ownership of the company. Shares of certain companies or associates can be bought or sold through the share market, or the stock market. To raise capital, public corporations typically issue shares to the general public.

However, in addition to shares, the stock market also facilitates the trading of debentures, bonds, and mutual funds. A person can earn a part of the profits earned by those companies through dividends as a shareholder. Share trade is an exciting opportunity to earn actively or passively but not always it can sometimes be risky as well as investors may have to bear the loss should the business fail to perform.

How to invest in Nepse?

“Price is a creature of the market’s mood. In booms, it is set by the greediest buyer; in busts by the most fearful seller” – Benjamin Graham

A famous share quote stated by the famous benjamin graham. The originator of “value” investing, Benjamin Graham, characterized the irrational and occasionally irrational behavior of investors through the moods of “Mr Market,” who is occasionally an utter pessimist and other times a wild optimist. The best way to stay the course and avoid panicking out of assets at the wrong time or chasing investments too high when they rise is to have a balanced perspective of opportunities and hazards. A very informative peice of quote right?

A lot of people have been involving themselves in the share market and they get inspired by the quotes share and explained by the people around the world. Ohh let me share you one of the quotes among all which i really found inspiring.

“If you don’t feel comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes.” – Warren Buffett.

Another advice from “The Sage of Omaha” advising investors to only purchase securities they are confident in and are willing to retain for a considerable amount of time. Although it can be difficult to foresee short-term swings, time usually works in the long-term investor’s favor who has purchased a wonderful firm at a fair price. Another of his well-known quotations along these lines is “Our favorite holding period is forever” – there is no need for an investor to sell as long as they remain confident in the long-term prospects.

A STOCK AND A SHARE: THE DIFFERENCE IN SHORT

“Stocks” is the more all-encompassing, generic phrase between the two. It is frequently used to refer to a portion of ownership in one or more businesses. In contrast, “shares” has a more precise explanation in everyday speech which frequently refers to ownership of a certain corporation or company. To make it more simple a share is a portion of the capital. Every component is referred to as a share if the company’s capital is 100000000 and is divided into equity shares of 10 apiece. Stock is the aggregated term for shares in economics.

Stock is the collective term for all of the shares. Similar to singular and plural, it is. That is why it is referred to as a share price rather than a stock price. Also, it is known as the stock market, not the share market. The fluctuation of a single share is the share price. A stock market is a marketplace where a company’s shares are traded in bulk.

Check out some books that you must read before starting to invest on share market

Share Market has been a very popular topic discussed among all the people at the moment due to its expanding influence. People have started to realize what Share really is and how important it is also how purposive and beneficial it is for now as well as in the future. The only stock exchange in Nepal is the NEPSE (Nepal stock exchange Ltd.). The equity market capitalization of the listed companies on NEPSE was over 334,357 crores as of May 2022. The main objective of the stock exchange is for the listed securities to be traded. NEPSE  is responsibly working for the registration of publicly issued securities for smooth and easy trading in the secondary market.

WHAT EXACTLY IS NEPSE?

NEPSE is a premier government-owned organization that has been registered with the Companies Act. The Companies Act of 2006 authorized the establishment of the Nepal Stock Exchange, or NEPSE, which is governed by the Securities Act of 2007. NEPSE’s main goal is to give government and corporate securities unfettered marketability and liquidity by enabling transactions on its trading floor through member market intermediaries including brokers, market makers, etc.

HISTORY OF NEPSE

The floatation of shares by Biratnagar Jute Mills Ltd. and Nepal Bank Ltd. in 1937 marked the beginning of the history of the securities market. Other notable developments in the capital markets include the introduction of the Company Act in 1964, the first issue of Government Bonds in 1964, and the founding of the Securities Exchange Center Ltd. in 1976. On 13 January 1994 AD, NEPSE opened its trading floor and is the most valued stock exchange in Nepal. As of now, the market value of all the companies listed on NEPSE is roughly 2.66 trillion Nepali rupees.

STATUS OF THE CAPITAL MARKET

The purchasing and selling of listed corporate securities and government bonds may be facilitated by members acting as brokers. Currently, the Nepal Stock Exchange currently offers general investors the ability to purchase and sell stocks through 50 member brokers with 43 branches conducting business on the trading floor in accordance with the Securities Act of 2007’s rules and bylaws. There are 21 locations for the broker house and its branches throughout Nepal.

Nepal’s capital market is still very much in its early stages due to the obvious size of the market, the nature of the business, the financial instruments to be traded, laws and regulations, technology primarily used for business, other physical infrastructure, manpower, etc.

nepse

OBJECTIVE  

The Securities Exchange Center was founded to assist and promote the expansion of the capital markets. It was the only capital markets institution performing the tasks of brokering, underwriting, managing public issues, making markets for government bonds, and other financial services prior to its conversion into a stock exchange. In 1993, the Nepali government changed the Securities Exchange Center into the Nepal Stock Exchange as part of a drive to overhaul the capital markets

PRIMARY OBJECTIVE

NEPSE is simply acclaimed to assist and promote the expansion of the capital market but not to forget its primary goals as well. Some of the primary goals of NEPSE include:-

  • To support the nation’s economic growth through capital production
  • To mobilize and advance investors’ interests by acting as a secondary market for the trading of government-issued securities of Nepal and organizations.
  • To work as a market platform provider for both buying and selling of debentures and secondary shares.
  • It is responsible for expanding the secondary market by properly complying with the guidelines of the government of Nepal by regulating listed companies, brokers, and investors as well as recurring monitoring of the listed companies.
  • NEPSE is also very significant for spreading public awareness about the capital market.
  • But over and above that NEPSE operates a credible and fair market that surely interests the investors and sellers.

The Nepal Stock Exchange currently offers general investors the ability to purchase and sell stocks through 50 member brokers and 41 Remote Work Stations in significant cities both inside and outside of the Kathmandu Valley. There are 21 locations for the broker house and its branches throughout Nepal.

Nepal’s capital market is still very much in its early stages due to the obvious size of the market, the nature of the business, the financial instruments to be traded, laws and regulations, technology primarily used for business, other physical infrastructure, manpower, etc. we can conclude that the foremost objective of NEPSE is to serve as the primary regulatory authority for listed businesses, securities dealers, and market activity.

OWNERSHIP OF SHARES ON THE NEPAL STOCK EXCHANGE

The Nepal government supports NEPSE. NEPSE is 58.65 percent owned by the Nepali government.

SNO.SHAREHOLDER’S NAMEOWNERSHIP
1.GOVERNMENT OF NEPAL58.65
2.NEPAL RASTRA BANK34.6
3.RASHTRIYA BANIJIYA BANK6.12
4.BROKERS OR MEMBERS,0.62

A pie chart is mentioned below to help you visualize the ownership:-

Should you invest in NEPSE?

That’s one question that most of the share newbies ask. And the answer to that is yes you should. NEPSE has been functioning as a key regulatory authority in terms of market operations, listed firms, and securities dealers in continuing to keep with its objective of facilitating the trading of shares, bonds, mutual fund units, and other securities through member brokers.

We can proudly state that the Future of the Nepal Share Market surely looks bright and secure if people keep on showing interest in learning and knowing about share and how the share and its market work. The future of the Nepal Share Market can be determined by the following factors:-

  • Cyclical nature
  • Liquidity and remittance
  • Online platform
  • Bank margin financing

●     Banks investing in financial institutions

●     Low loan rates and savings rate

  • Apprehension of missing out and envy

Simply the market by the above mentioned factors and others as well such as by the cyclical nature it is showing and also its abundance of liquidity in the market. Given the plenty of liquidity, banks started providing margin loans. Banks were up until recently not permitted to make investments in financial institutions. However, they have started to invest in the equities of financial institutions after the market began to tumble in 2019. As they discovered a deal in the marketplace, this pattern persisted.

Some equities had values that were significantly lower than they ought to have. These banks and financial organizations bought up these equities, which explains why shares of insurance businesses and micro-loans, which have small market shares, have surged. Nepal’s share market is on the path of continuous rise as it is going online due to its easy access and understanding.

FAQ

What is IPO?

An initial public offering (IPO) is the process of selling new shares of a private company to the general public. To hold an IPO, businesses must satisfy Securities and Exchange Commission (SEC) and exchange standards.

Should I invest in the upcoming IPOs?

The outcomes of the bull market are IPOs. Companies typically go public when conditions are favorable, such as when consumers are upbeat and the economy is performing well, in order to generate listing gains. A company’s ability to survive in a declining market during a bear market is really put to the test. Investors are welcome to invest in such prospective initial public offerings (IPOs) if they can identify them (excellent business idea, strong finances, effective management, reasonable pricing, etc.)

How much returns can I expect from the market?

Multiple equities will be present in a stock portfolio. Some stocks will occasionally do incredibly well, while others won’t. Stocks that perform well and those that don’t will contribute to the portfolio return.