What is Nepal Stock Exchange (NEPSE) ?
The Nepal Stock Exchange Limited (NEPSE) is the country’s stock exchange. NEPSE has two primary owners as of the writing of this article: the Nepal Government (58.66 percent) and Nepal Rastra Bank (34.60 percent ). Rastriya Banijya Bank (6.12 percent) and Members or Brokers are the other shareholders (0.62 percent ). The Securities Board of Nepal regulates it (SEBON).
NEPSE has approximately 245 firms listed. NEPSE is available to Nepalis who want to buy or sell such companies’ shares and bonds. NEPSE has licensed roughly 50 brokers (brokerage businesses) throughout Nepal to enable buying and selling.
What is the difference between stocks and shares?
Assume a business. XYZ is a successful company. Its product is doing well and has a high level of consumer demand. It needs to install a new machine to its facility to improve its manufacturing capacity. To install a new machine, the owner of the firm XYZ might either seek a loan from a bank or seek investment from possible investors. If the owner approaches a bank for a loan, he or she will be required to pay interest on the borrowed amount after a specific period of time. If the owner approaches potential investors, he or she can convince them that XYZ will do well in the future and that investors will profit handsomely.
To raise funds from investors, the owner must present business XYZ paperwork to the Securities Board of Nepal (SEBON). SEBON verifies the paperwork, and if XYZ receives approval, XYZ will inform investors in the media that XYZ is soliciting funds through investment. This is referred to as an Initial Public Offering (IPO) (IPO). In Nepal, each IPO share costs Rs. 100. (unless stated more than 100). That is, if you invest Rs. 1000 in XYZ, you will receive ten shares. The Primary Market is another name for this.
You may need to sell those shares and convert the proceeds into cash at some point. You must go to NEPSE brokers and sell it to potential buyers in order to do so. This is referred to as the secondary market. Instead of selling your shares back to XYZ, you sell them to other possible buyers and profit from the transaction. Liquidation is the process of transforming shares into cash.
To purchase and sell shares in Nepal, what do I need?
A Demat account is required for any Nepali who want to purchase shares in the primary or secondary markets. A Demat account is similar to a regular bank account, except that instead of holding cash, it keeps shares. You can open a Demat account with any bank or brokerage firm. When you acquire shares, they will appear in your Demat account, and when you sell them, they will be removed.
When the firm in which you invest pays you a return in the form of bonus shares, it is also paid immediately to your Demat account. If the company in which you invested pays you a cash dividend, it will be deposited into your regular bank account. As a result, the Demat account is just for shares. It is recommended that you have two accounts: a Demat account for stock holdings and a regular bank account for cash dividends (if your invested company gives you cash dividends.)
Following the creation of the Demat account, the next step is to open a trading account with the brokerage firm. You have the option of selecting one of 50 brokers; however, the best advise is to select one with an office close to you, as all 50 have the same commission charges. Brokers will assist you in buying and selling stocks for a low commission cost. You can receive an internet login from them, call them, or meet them in person to place orders for buying and selling stocks.
When you buy shares in the secondary market in Nepal, your shares will arrive in your Demat account at T+3 (Transaction plus 3 days) principle – that is, when you pay your buying share price, your shares will appear in your Demat account after 3 days. When it comes to selling, the T+5 (Transaction plus 5 days) principle applies, which means that if you sell your shares, you will receive your money in 5 days.
When will I be able to buy or sell stocks?
Except for national holidays, NEPSE is open five days a week, from 11:00 a.m. to 3:00 p.m., from Sunday to Thursday. During the opening hours of the NEPSE trading floor (11:00 AM – 3:00 PM), you can place your purchasing or selling order with your broker.
How do I go about purchasing or selling stock?
Brokers can help you buy and sell stocks. You can give a broker instructions in a variety of ways, such as buying or selling at a given price, in a specific price range, or below or above a certain price. It could also be a certain day or range of dates. You will receive notifications that your buy or sale has been confirmed once your instructions have been followed. And you must visit your broker to deposit either the purchase amount or the selling instructions slip – this is referred to as a transaction.
What types of businesses are listed on NEPSE?
NEPSE has 223 (June 2021) firms listed. NEPSE has created sub-indices for each firm, and the following sub-indices are now available:
- Banks that deal with commerce
- Banks for Development
- Life insurance is a type of insurance that protects
- Products and Manufacturing
- Mutual Funds are a type of mutual fund that
- Insurance that isn’t a life insurance