The NEPSE index closed today at 2,046.81, a decrease of 23.60 points from the previous trading day’s close. This represents a 1.14% decrease. The following are the results of the survey.
Today, the index opened at 2,069.67 and reached an intraday high of 2,069.78. It fell as low as 2,040.18 before
What is NEPSE Index?
Nepal stock exchange at the end of the day publishes the transaction index which is called the NepSe index. In simple language, the base market capitalization is used to calculate the Nepse index. The base market capitalization is February 12, 1994. In this day, share transaction was held for the first time in Nepal Stock Exchange. It is the first index to show the work of the stock market. The increase in the value and transaction of transacted share increase than the market capitalization value also increase. While calculating the market capitalization, the total share is multiplied by a certain day’s share value. As there is a different value of share number and share price, separate multiply value is calculated and added later to find the total sum. In this way, market capitalization is calculated. For example, the company named ‘SBC’ has registered 5, 00,000 number of shares @ Rs 100. On that day, the market capitalization value was Rs 50 crore. The market capitalization of each company is added to find out total market capitalization. Stock exchange finds out the market index on the base of market capitalization.
When the market capitalization increases, the Nepse index also increases and where market capitalization decreases, the Nepse index decrease. For example, on Ashad 24, 2067, the total market capitalization was Rs 3 Kharab 61 Arab 59 crore 77 lakh whereas adjusted base market capitalization was Rs 78 Arab 59 crore 70 lakh 5 thousand only.
Likewise, the Nepse index calculation formula is given below.
Current Market Capitalization
NEPSE index = × 100
Adjusted Base Market Capitalization
Rs 361597.70
Or, Nepse Index= × 100
Rs 78597.05
= 460.07
Therefore, the Nepse index was close at 460.07 points.
A share is essentially a fraction of a company’s ownership. Purchasing or selling shares entails acquiring or disposing of a portion of the company’s ownership. The stock market, also known as the share market, is a place where you can buy and sell stocks. In order to raise money, public corporations usually sell shares to the public, but the stock market often trades other instruments such as debentures, bonds, and mutual funds.
Dividends are a way for you to get a piece of those companies’ earnings as a shareholder. While share trading is an exciting way to earn money both actively and passively, it is also risky since investors can have to bear the loss if the company fails. As a result, as a novice, it is important that you gain a thorough understanding of the market before investing your money in stocks.
Here is a brief introduction of how you can participate in the game of stock trading.
Opening a dematerialized (DEMAT) account at one of the Depositary Participant (DP) licensed by the Central Depository System and Clearing Limited (CDSC) is a prerequisite to participate in both primary and secondary market. Most commercial banks, merchant bankers and stockbrokers provide such services. If you already own some stocks in your name, then you can give your DP to dematerialize your physical share certificates into dematerialized shares. The DEMAT account is similar to a bank account which debits and credits the shares you sell or purchase. Most DP’s also provide clients with facilities to check their DEMAT account status online as well.
To get started in the stock market, it is essential to first understand how the market functions. Securities Board of Nepal (www.sebon.gov.np); the sole regulator of the capital market is a useful source for primary information. Its website provides information on various securities laws, investor education, and upcoming public issues amongst others. Similarly, the Nepal Stock Exchange (www.nepalstock.com) the sole secondary market; and its mobile-based application is a great source to get hands-on information. There are many other popular websites that provide constant updates about the capital market such as; Share Sansar and Mero Lagani. Furthermore daily national newspapers, websites of merchant bankers and credit rating agency – icranepal.com – also provide good information.
One of the best opportunities to participate in the capital market is to apply for primary offers in the primary market such as; Initial Public Offering (IPO) or Further Public Offering (FPO). Most companies offer primary issues to the general public at face value of NPR 100 per stock, or at a premium based on their valuations. The risk is lower when you purchase in the primary market as you get an opportunity to buy shares at a lower cost as compared to purchasing those shares in the secondary market once they are listed. Also, look out for opportunities to participate in the primary offering of mutual fund schemes which can be a beginning point.
News about primary issues generally comes out in national newspapers and are widely announced on other media platforms. Once you know the primary issues are out, you can read their prospectus to see their detail information such as; past and projected performance, & management amongst others. You can also look at their credit rating provided by a licensed credit rating agency before making the decision to invest.
All the stocks offered via the primary market are listed in the secondary market i.e. Nepal Stock Exchange (NEPSE); currently, there are 231 companies listed in the stock exchange. The secondary market provides the platform to sell the shares you hold or purchase new shares from the market. The share price of these listed companies and the value of NEPSE Index changes every day based on total demand and supply of shares in the market.
If you wish to get involved in the secondary market, you will need to open a transaction account at a stock broker’s office. There are currently 50 stockbrokers licensed by NEPSE while there are a few stock broker offices outside Kathmandu. Once you open an account with a stockbroker, they will provide you with a unique ID code via which all the transactions in your name will be executed.
To make a purchase or sale order you will simply have to call your stock brokers or visit their office to place an order, make sure you have the shares in your DMAT account before you place a sell order to your stockbroker. The stockbroker charges some commission as a brokerage fee for each transaction while you have also have to pay a capital gain tax of 5% if applicable while making sales.
If you are still confused and less confident about entering the market or you do not have time, energy and resources, do not worry as there are a number of professional licensed Portfolio Management Companies providing you with a full range of products and services under Portfolio Management Services (PMS). Based on your investment goals and expectations, these portfolio managers develop portfolios matching your risk appetite and invests in the capital markets on your behalf. The portfolio manager charges minimal annual and performance fees while these services offer you the opportunity to grasp the benefits of the capital markets. Moreover, you can also handover your existing portfolio to these portfolio managers for restructuring and further management.
All in all, as the stock market is constantly evolving and getting technical, retail investors are highly advised to seek professional advice and avoid making investments on herd mentality – invest wisely!