Things You Should Know Before Investing in Share Market of Nepal

INVESTOPAPER

Investing is not an easy job, especially in the stock market. With the highly volatile nature of market, investing gets trickier. So, if you are a beginner in the share market of Nepal, follow some guidelines in order to protect yourself.

An investor can purchase shares from the primary market i.e. when the company issues shares to the public or can buy or sell share in the secondary market. Nepal Stock Exchange (NEPSE) is the only secondary market of Nepal. There are few things you should consider before investing in the primary or secondary share market of Nepal.

Also Read : Pros and Cons of Investing in shares

Purchasing shares at the time of public issue : Primary Market

In case of public issuance of shares, it is advisable for the investor who wants to purchase shares to make investment decision by studying and analyzing the details of the organization concerned as well as the management letter and regulations, nature of the business of the concerned company, financial details, risk aspect, founder /operator details.

Only make investment decisions by studying the company’s statement of disposal and analyzing important factors such as the company’s performance, financial position (net worth, profit and loss position, etc.), management, and risk.

Also Read: 7 Things To Watch Before Buying Stocks

Contact the issuing company, the issuing and sales manager, and the designated application collection centers for other updated details related to the issuing company, including the statement.

After applying for the purchase of shares, be aware of the distribution of shares, repayment, receipt of certificates and listing.

You should be aware of the risk of change in the market value of the shares. The issue price of the shares does not reflect the value in the stock exchange after listing.

Buying and selling shares listed in Nepal Stock Exchange (NEPSE) : Secondary Market

Securities are traded on the stock exchange at a price determined by market demand and supply. Share trading on the stock exchange is done through member brokers. Those who buy and sell shares have to pay commission to the broker.

Also Read: Basic Requirements To Start Trading In The Stock Market Of Nepal

It is safer to make investment decisions based on sensitive information that may affect the value on the stock exchange. It is better for the investor to take the necessary information from a securities broker or financial expert whom he trusts and make a decision regarding the purchase and sale of shares.

Only buy and sell shares through a stock broker who has received a certificate from the Securities Board of Nepal (SEBON) and is a member of the Nepal Stock Exchange.

Study the company’s periodic and annual reports. Make investment decisions based on important factors such as the company’s performance, finances, management, and returns to investors.

Also keep abreast of the daily market value and trading volume of shares circulated through newspapers and other media.

Also Read: Bull and Bear Market: How to invest wisely in each market?

Contact Broker

Sensitive information that may affect the price of shares related to the company is immediately placed on the notice board of the Nepal Stock exchange, so contact the licensed securities broker for information about such information.

Before buying and selling shares, you need to provide the required details to the broker to keep the customer account. Also, get the proof of the purchase and sale order given by you. Clear the transaction within 1 working day after the trading day.

In order to sell immediately without transfer of name, the shares have been recorded in the exchange market and placed in blank transfer. Do not miss the opportunity to receive a dividend that the company can declare in your name before the closing of the register or before the end of the financial year.

Thus, when buying and selling shares in the secondary market, one should be fully aware of the risks, returns and future prospects. Investors wishing to purchase shares listed in the Nepal share market should know about the performance of the concerned organization, financial statements and annual report, past performance and founder/management information.

Others Things To Consider

Since you have to bear the risk of investing in shares, make decisions about investing at your own discretion. Invest in shares without falling in trap by rumors, unnecessary publicity or deception.

Also Read: Higher Risk Higher Return: How Much Risk Should You Take?

Don’t forget to keep abreast of the activities of the company you bought the shares. Also, attend the company’s general meeting to update with the yearly performance of the company.

When investing in shares, be careful to avoid future identity disputes by presenting your citizenship certificate or official identity card issued by the Government of Nepal.

If you have any queries or complaints, you can also contact the Nepal Stock Exchange and Securities Board of Nepal.

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