Guide To Investing in NEPSE Share Market

A Beginner’s Guide To Investing in NEPSE Share Market


Investing has grown to become one of the best income sources for Nepali people over the past decade. As the Share Market continues to be regulated better, and more accessible, a large number of people have started considering investing instead of just putting money in a bank.

However, the share market is definitely still new to most people, and aspiring investors in Nepal. In this article, we will attempt to show you the beginning steps for someone looking to invest in Nepal, and explore the associated risks of investing.

Getting Started: Prerequisites

There is a checklist of things you need to have to fill the prerequisite of investing.  These are absolute necessities, and you should work on getting them right away if you are considering the investment path.

  1. A Bank Account: Preferably an “A” level bank account in Nepal so that you can enjoy the full range of features with convenience and minimum hassle.
  2. A DEMAT account: After opening a bank account, you will be eligible for a dematerialized account or DEMAT for short. This is mandatory for any kind of investment inside Nepal. You will be using this account for any transaction involving shares or stocks.
  3. C-ASBA number: After getting a DEMAT account, you will get what is called a C-ASBA number. This will allow you to process transactions and you will be able to apply for shares in the primary market.
  4. MeroShare: This is not so much of a requirement, but it does make investing way easier. A Mero Share account will allow you to get involved in the share market online, anywhere in the world.
  5. Broker Account: If you are considering the secondary share market, you will need to get an account from one of the 50 broker companies in Nepal.
NEPSE Share Market

Collecting Information

After you have completed the checklist items, you will now start to actually invest. But first, you need to do your research. Investing is hardly risk-free and you need to make informed choices if you plan to succeed. In order to do that you need to start collecting proper information about the current status of the share market.

  1. SEBON: Securities Board of Nepal is the government regulator for the capital market in Nepal. You will find their website to be a helpful site for collecting information, especially on primary shares.
  2. NEPSE: NEPSE is the SEBON counterpart for the secondary share market in Nepal. Actually, it is the only secondary share market in Nepal, and its website similarly contains information about secondary shares.
  3. Investopaper: You can think of investopaper as an online newspaper dedicated to the share market. On their site, you will find several guides, tips, and up-to-date information about the current condition of the market.
  4. IcraNepal: Icranepal is the first and the most popular credit rating agency in Nepal. This site is particularly helpful when choosing what shares to apply to. The agency basically rates shares and how likely they are to yield profit, hence helping you make better choices
  5. Company website: Whenever you are thinking of investing in a particular company, you will be able to find information about their management and works on their website. If you can not find it there, you can also check past records of the company through credit rating agencies like Icra Nepal.

IPOs FPOs and Secondary Shares

I have mentioned the primary and secondary market quite often in this article, you might be wondering what they are. Well, it’s quite simple once you understand it.

Primary Shares

Primary shares are direct shares offered by Ltd companies, usually at a value of NPR 100 per stock. These shares are called IPOs (Initial Public Offerings) or FPOs (Further Public Offerings). These shares are mostly offered by startups (IPOs) and other public companies (FPOs) from time to time.

A Beginner’s Guide To Investing in NEPSE Share Market

Demand is high for IPOs because they are low-risk investments, and you will usually find yourself in a lucky draw for stocks. That is why it is necessary to stay updated about the market, and grad IPOs as early as possible. You will find information about it on general NEPSE updates, or the SEBON website. You can usually apply instantly through your Mero Share account.

Secondary Shares

Secondary shares, in layman terms, could be labeled “used shares” so to say. Once people invest in shares, they will later sell those shares again to liquidize the asset. In such cases, you will deal in a secondary market where share prices will be determined by demand and supply. If you are going to be a serious investor you will need to evaluate this market often, and you will primarily be working through a share broker office.

A Beginner’s Guide To Investing in NEPSE Share Market

You will need to apply for an account in one of the 50 brokers in Nepal and will be primarily working through NEPSE: the secondary share market of Nepal.

Rookie Mistakes to Avoid

There are certain mistakes that beginner investors are especially prone to while first getting into the market. Below, I have highlighted some of the main ones.

Investing Based on Unverified Sources

Proper research is key to good investments. You need to be well informed about what you’re doing if you are going to put money into it. Taking a friend’s word for investment is NOT being well informed. You have to steer clear of rumors about certain companies and practice involving in your own research properly.

When doing research, only trust verified sources like NEPSE or credit agencies that have consistently produced good results.

Investing Without Understanding

If a company’s policy and objectives are too complex for you to understand, investing there is probably not a good idea. So, industries are simpler than others, and if you are familiar with the industry they operate in, you are more likely to make better choices.

It comes back to making the right investments, and the best way to do that if you know what the company will be doing inside out. With partial, or half-learned understandings, you are prone to higher risks of losing money.

Holding onto Failing Stocks

You should avoid holding onto low-performing stocks waiting for a rebound. This will be costly and the probability that your stock value will rise is pretty low anyway. Until you become a pro in investing and start being able to properly predict rebounds, it’s a better idea to just let go of bad stocks before it falls even more.

Final Thoughts

The websites and information sources I have listed here are all reliable and verified sources. If you need more information on stocks, you have enough resources for more research. Remember that information is key and try to make the best out of what you have. If you follow these guidelines, your money is guaranteed to multiply itself.

Related Topic: https://www.tipsnepal.com/how-to-buy-sell-shares-online/