How does the share market work in Nepal?

The share market in Nepal, operated by the Nepal Stock Exchange (NEPSE), functions as a platform for buying and selling securities such as stocks, bonds, and mutual funds. Here's a general overview of how the share market works in Nepal:

 

1. Companies and Initial Public Offerings (IPOs): Companies that wish to raise capital from the public can go through the process of Initial Public Offering (IPO). They offer a portion of their shares to the public, allowing individuals and institutional investors to become shareholders and participate in the company's ownership.

 

2. NEPSE Listing: Once a company has completed the IPO process, and its shares have been issued, it can apply for listing on the NEPSE. Listing on NEPSE enables the company's shares to be traded on the exchange.

 

3. Investors and Brokerage Firms: Individuals or entities interested in buying or selling shares can do so through licensed brokerage firms. These firms act as intermediaries between investors and the exchange. Investors open accounts with brokerage firms to facilitate their participation in the share market.

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4. Trading Process: NEPSE operates through an electronic trading system. Investors can place buy or sell orders for the shares they wish to trade. Based on price and time priority, these orders are matched.. Once a trade is executed, the shares are transferred from the seller's account to the buyer's account.

 

5. Share Price Determination: The share price in the market is determined by supply and demand dynamics. If there is high demand for a particular stock, the price tends to increase, and if there is more supply than demand, the price may decrease.

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6. NEPSE Index: NEPSE maintains an index called the NEPSE Index, which reflects the overall performance of the market. The index comprises selected listed companies and is used as a benchmark to measure the market's performance over time.

 

7. Regulatory Oversight: The Securities Board of Nepal (SEBON) regulates the share market in Nepal. It ensures compliance with regulations, protects investor interests, and promotes fair and transparent trading practices.

 

It's important for individuals interested in participating in the share market to have a good understanding of the companies they are investing in, the risks involved, and to conduct thorough research. Consulting with licensed brokerage firms or seeking professional advice is advisable to make informed investment decisions.

 Share Market Nepal

Please note that this is a general overview, and the specific processes and regulations may vary. It is recommended to refer to official sources, NEPSE guidelines, and consult with licensed professionals for accurate and up-to-date information regarding the share market in Nepal.