How to Invest in Stock market in Nepal 2024
The number of investors in the Nepalese Stock Market has rapidly increased in the past few years. IPO(Initial Public Offering) applicants have increased by almost six-fold in the past few years.
However, most new investors only know how to apply for an IPO and only stay active in the primary market. Most have no idea about buying and selling in the secondary market. In this guide, We have thoroughly explained how to invest in stock market in Nepal.
First, you should know the basics of stock market and how it works.
What is the stock market and how it works?
Before explaining about the stock market, let's first talk about what a stock means. A Stock is a part ownership of publicly listed company. A stock can be bought be both individual and corporation. It is a very small portion of the company which the shareholder can own/buy.
A Stock market is place where the stocks are bought and sold. A buyer set a price at which they want to buy the stock at and the sellers sells them and vice versa. Investing in stock market can be very risky if you don't know how it works. The stock market is very similar to the theory of demand and supply.
If the demand in stock increases the price will also follow which means large number of buyers of a certain stock increases the price. Similarly, when there are large number of sellers the price decreases. Demand and supply of stock is only one of the factors that influence the price of the stock.
Nepal Stock Exchange (NEPSE)
NEPSE is the currently the only available stock exchange platform in Nepal. It has the stock of many different public companies of which the stock can be bought and sold. It provides a short detail about the company's current price, number of stocks, symbol, positive stocks, negative stocks and so on. The NEPSE opens from 11:00 am to 3:00 pm. The stocks can only be bought and sold during this time. It opens five days a week from Sunday to Thursday. It also remain closed on public holidays.
How to Invest in Stock Market in Nepal?
The most common question is how to start investing in stock market in Nepal. There are two ways of investing in stock market, primary and secondary market.
Primary Market : When a company goes through the process of being listed in the stock market, it issues a certain amount of shares at a certain price. This is known as Initial Public Offering (IPO). If you purchase the stock of a company through IPO, it is purchasing through primary market.
Secondary Market: A secondary market is buying and selling of stock from already listed company in NEPSE. You need to have a TMS account to be able to purchase in secondary market.
To begin investing in stock market in Nepal, you will need to have a few things first. First, you will need a bank account and a Demat account for holding all you stocks in a digital form. To apply for a Demat account, you will have to go to a company that is a depository participant which typically involves companies like investment banks, stockbrokers, and banks. You will also need to apply for Meroshare account to be able to apply for IPOs in the primary market. This is it for purchasing the stock from primary market.
To be able to buy and sell in the secondary market, you will need to have a broker account in addition to Demat and Meroshare account. You can do that from the stockbrokers. Stockbrokers acts like the middleman that brings buyer and seller together. The brokers charge a certain commission from both buyer and seller for their service which is a tiny portion of the transaction amount.
Before you begin
Before you start investing in stock, you will need to learn the basic of stock market which includes learning about the company, fundamental analysis and technical analysis. With the help of these topics you will understand the current market condition, how to select the stock to buy, when to sell them, how will the price move and so on.