Nepal Share Market: A Beginner’s Guide
Nepal share market is the theme of discussion everywhere nowadays, from the dinner tables to tea stalls on the roadside. If you’re the one who’s heard many but yet, don’t know where to begin, don’t worry! We are here to educate and guide you to kickstart your investing journey.
The objective of the investment is to put your money on one or more kinds of investment vehicles with the expectation that your funds will grow over time. Different investment vehicles involve different levels of risk.
Many people still choose to invest their wealth in banks, financiers and cooperatives as savings or fixed deposits. This is undoubtedly the safest investment, but the return is only a few percentages that are unable to overcome the current inflation rate.
Another alternative is to invest in mutual funds to entrust your capital to an exclusive group and experienced persons who gather money from individuals like you, invest in various ventures and give you returns. This means less risk, as someone who is better-informed and more experienced would invest on your behalf but may involve a number of charges and restrictions.
The Nepal share market would be one of the alternatives for you if you wish to invest your capital by yourself. It has a significant risk compared to the above-mentioned choices, but also the ability to provide the largest returns.
What is a share?
A share is a document that validates your ownership in a company, and you can sell it to others or keep it for yourself to be eligible for equal shares of the company’s profits.
What is a share market?
A stock market is a venue where people may buy and sell shares that have been publicly issued. An official marketplace has been created for investors to purchase and sell their shares on, in order to promote the public interchange of buyers and sellers. The Nepal Stock Exchange (NEPSE) is one such institution in our country.
Now that you know what a share and a share market are, let’s look at the things you’ll need to get started.
It’s time to open a bank account if you don’t already have one. You may open an account with any bank that is convenient for you.
Some banks provide no-fee account opening, while others demand a minimum deposit. Again, each bank provides many types of savings accounts with various features; select the one that best suits your needs.
Dematerialized (DEMAT) Account
A dematerialized (DEMAT) account is one in which the account holder’s shares are held in his or her name. Opening a DEMAT account with one of the Depositary Participant (DP) authorised by the Central Depository System and Clearing Limited is one of the requirements for participating in both primary and secondary markets (CDSC).
Your shares are stored electronically in a Demat account. Such services are offered by many commercial banks, merchant bankers, and stockbrokers. You may go to your preferred bank, fill out a Demat form, and submit it. Some brokers now provide an online option for opening a Demat account.
If you already have some stocks in your name, you can instruct your DP to convert your physical share certificates to dematerialized shares. The DEMAT account works in the same way as a bank account, debiting and crediting the shares you sell and buy.
Mero share Account
Although it is not required, having a mero share account will make your life easier. It allows you to apply for IPOs, FPOs, and right shares online, eliminating the need to visit a bank or stockbroker.
It also allows you to view all of the stocks in your portfolio, compute the weighted average if you purchased shares at various rates at different periods, and transfer shares from your Demat account when you sell a stock. It is one of the tools you will utilize frequently throughout your financial journey.
You can create a mero share account and a Demat account at the same time. You just need to complete one meroshare form and submit it with your Demat application. If your application is approved, you will get an email to the email address you provided in the form. It may end up in your spam folder, so keep an eye on it.
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A Demat account and trading account are complementary. Demat stands for ‘dematerialized’ implying that it is a storehouse for your shares. A trading account, on the other hand, is used to buy and sell securities in the Nepal share market.
If you wish to get involved in the secondary market, you will need to open a trading account at a stock broker’s office. NEPSE has licensed over 50 stockbrokers, and there are a few stockbroker offices outside of Kathmandu.
When you create an account with a stockbroker, they will provide you with a unique ID code that will be used to perform any transactions in your name. You will also receive an email with login information and a link to the broker TMS.
To place a buy or sell order, simply log into the broker TMS with your credentials. A commission is charged by the stockbroker as a brokerage fee for each transaction, and you must also pay a capital gain tax of 5% if you sell your shares.
This isn’t required, but it will make your life easier when loading money (collateral) into TMS to buy shares. You must first complete out an online form to establish a Connect IPS account. After successfully completing the form, you must print it and submit it to your bank.
With these accounts in hand, you are ready to enter both the primary and secondary markets and start your journey in Nepal share market
Applying for offers in the primary market, such as an Initial Public Offering (IPO) or a Further Public Offering (FPO), is one of the best ways to engage in the capital market (FPO).
The majority of firms sell primary issues to the general public at 100 per stock face value or at a premium based on their valuations. When you buy in the primary market, the risk is reduced since you have the chance to buy shares at a cheaper price than when you buy them in the secondary market after they are listed.
How to apply for IPO/FPO/Right Shares?
To check IPO/FPO/Right shares that are currently open, you can log in to your meroshare account and click MY ASBA. Under Apply for Issue, you can see the list of companies available to apply. You can read their prospectus to see their detailed information such as; past and projected performance, & management amongst others.
You can click apply, enter your bank account, number of kitta, CRN number and proceed. After that, you have to enter your transaction pin.
The secondary market i.e Nepal Stock Exchange (NEPSE), lists all of the equities offered on the primary market; the stock exchange now has over 200 firms listed.
The secondary market is a marketplace where you may sell your existing shares or buy new ones. The value of the NEPSE Index and the share prices of these listed businesses fluctuate every day based on the overall demand and supply of shares in the market.
Let’s say you applied for an IPO and were fortunate enough to be alloted 10 kitta. You can sell that 10 kitta on the secondary market after the firm is listed which you can do through logging into your TMS account.
Nepal Share Market News
To begin investing in the Nepal share market, you must first grasp how the market works.
The Securities Board of Nepal, the country’s single capital market regulator, is a good place to start seeking primary data. Its website, among other things, includes information on securities legislation, investor education, and forthcoming public offerings.
Similarly, the Nepal Stock Exchange is the country’s only secondary market, and its mobile-based application is a fantastic way to receive real-time data.
Many other popular websites, such as Share Sansar, Mero Lagani and Nepsealpha, give regular information on the capital market. Additionally, daily national newspapers, merchant banker websites, and a credit rating organization all give useful information.