What is NEPSE?
Nepal Stock Exchange operates as NEPSE where it functions as the exclusive stock exchange within the Nepalese territory. NEPSE conducts stock trading activities in Nepal under enforcement from the Securities Board of Nepal (SEBON).
The NEPSE system performs exactly like a marketplace which operates like a vegetable market but functions by allowing trading of company shares instead of produce purchases.
NEPSE first started operations in 1993 (2050 B.S.) and its headquarters settled down in Kathmandu at Singhadurbar Plaza.
Why is NEPSE Important?
The Nepalese economic growth depends heavily on NEPSE which enables companies to obtain funds and enables public ownership of company stock. It provides:
- A regulated platform for trading
- Transparency in transactions
- The general public obtains access to various investment possibilities through this platform
- Contribution to national financial development
How NEPSE Works ? – Step-by-Step
The operations of NEPSE are explained step by step starting from the time companies issue shares up to the point when investors perform purchases and sales actions.
1. Company Listing (IPO Phase)
- Companies raise capital through public share offerings called IPOs (Initial Public Offering) to gain funds from the market.
- A proposal needs submission to SEBON for evaluation.
- SEBON gives its approval after which the IPO receives listing on NEPSE.
2. Investors Apply for IPO
- General public engages in share application through MeroShare and also does so directly through banks utilizing ASBA system.
- The IPO completion leads to share distribution results and the subsequent publication announcement.
3. Secondary Market Trading
- Following Share distribution during the Initial Public Offering the company allows its stockholders to buy and sell shares on the Nepal Stock Exchange.
- Stock trading activities take place through brokers who hold licenses from the corresponding authority.
- The trading platform of stock brokers serves as an interface for order placement followed by broker office visits for alternative transactions.
4. Price Movement
- The stock price is determined through competition between supply and demand forces.
- The market price elevates when numerous people choose to purchase.
- Share prices show a downward trend when numerous sellers become active in the market.
- The NEPSE index presents the combined performance results of the market
Key Terms You Must Know
| Term | Explanation |
|---|---|
| NEPSE Index | This indicator demonstrates the complete performance level of the Nepali stock market. |
| IPO | A company uses its initial public offering as its initial step to access stock market trading. |
| FPO | Companies make Follow-on Public Offering through additional shares released after their Initial Public Offering. |
| Right Share | The company provides existing shareholders with special deals on stock shares. |
| Demat Account | Individuals can maintain their stock holdings through digital share holding accounts similar to bank accounts for securities. |
| MeroShare | Users can access an online platform which allows them to oversee shares and make IPO applications and view portfolio information. |
| Brokers | Middlemen - A regulated group of middlemen has NEPSE authorization to perform transactions. |
NEPSE Trading Hours
Sunday to Friday 11:00 AM to 3:00 PM
Saturday Closed
How Can You Start Investing on NEPSE?
Participating in NEPSE requires you to complete the following sequence of actions:
- Obtain a Demat Account by opening it with either a bank or capital company.
- Set up your MeroShare Account through the connection to your Demat account.
- Investors can apply for Initial Public Offerings (IPOs) while sharing through broker services.
- Learn and research before investing.
The simple investment of Rs. 1000 in an initial public offering (IPO) allows you to become part of Nepal’s financial system.
Final Thoughts
NEPSE functions as the fundamental element of Nepal's share market. Mastering NEPSE operations is crucial for all investors from novices to professionals when it comes to wise share market investments. The platforms MeroShare and Demat accounts and trading platforms together enable everyone to invest from anywhere at home.