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Beginners Guide for Investors in the Nepali Capital Market

Lately, the interest in the capital market in Nepal is slowly on the rise. If you’re a beginner in Nepali capital market,  let’s start. The capital market is the market for long term loans and equity capital. Companies and the government can raise funds for long tem investments via capital market.

The Capital market includes the stock market, the bond market and the primary market. In context of Nepal, we find that the majority of the companies issue shares in the market which is called as stock market.

What is share and share market in Nepal ?

A share is basically a unit of the ownership of the company. So, buying a share means you are buying a partial ownership of the company. As a shareholder you can earn a part of the profit earned by the company through dividend. So, share trade is absolutely an exciting opportunity to earn  but with that there is a risk at same time. You have to bear the loss if company can’t perform well. So, as a beginner you need to understand the market before investing.

How to invest in a share market in Nepal?

  1. Get started  – OPEN a DEMAT account.

How to open a demat account?

The process of opening a demat account is very simple &easy. It is similar to opening a bank account. The process of opening a demat account is as follows :

  • The Beneficial owner (BO) should fill up the account opening form with relevant documents, and send to Depository Participant (DP).
  • DP set up the account and capture signature and send it to CDS and clearing ltd. (CDSC) and CDSC send a confirmation to
  • DP provides the confirmation letter to BO.

You can fill up the form from DP itself or from the merchant banks like

Prabhu Capital, NIC Asia Capital etc. and obtain the CRN number from the bank after getting mero share login details from DP.

Now you can apply for the IPO and participate in capital market.

You can participate in primary market and secondary market. So let us talk what primary and secondary market refers to:

  1. Primary Market:

The Primary Market, also known as a New Issue Market, is where new securities are issued, it is part of the capital market. Corporations, national and local governments, and other public sector institutions can get financing through the sale of new stock or bond issues through the primary market. Put simply, the primary market creates new securities and offers them for sale to the public (Initial Public Offering).

All companies require capital for their operations. This capital (money) can be in the form of equity or debt. Equity is the stock capital (share capital) of a company. Debt consists of all the loans taken by the business.

In other words, the first public offering of equity shares or convertible securities by a

Company, which is followed by the listing of a company’s shares on a stock exchange, is known as an initial public offering (IPO). The Primary market also includes issue of further capital by companies whose shares are already listed on the stock exchange.

For applying shares of IPO, we can easily apply through the mero share app which will be given to you by the bank.

  1. Secondary Market:

Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. It essentially comprises of the stock exchanges which provide platform for trading of securities and a host of intermediaries who assist in trading of securities and clearing and settlement of trades. The securities are traded, cleared and settled as per prescribed regulatory framework under the supervision of the Exchanges and SEBON.

The stock exchanges are the exclusive centers for trading of securities. Listing of companies on a Stock Exchange is mandatory to provide an opportunity to investors to invest in the securities of local companies. In Nepal, secondary market is observed by the Nepal Stock Exchange Ltd., a public company established under Securities Act 2063 under the oversight of SEBON.

For participating in secondary market , you need to have a broker ID. A broker ID can be made easily by going to nearby broker office.

How much can we earn through share market?

In the past few months only, those who had applied for IPOs of Companies earned around 2 lakhs in average per person, mainly from huge allotment of shares in NRIC and NIFRA.

If you had opened Bank and Demat Account of your family members and had invested in Share market, mere investment of few thousands would have turned into lakhs eg, if you have a family if 5 persons, you could have earned upto Rs 10 lakhs (5 * 2 lakh each) in the past few months only.

Note that each person should have their own Bank and Demat Account for applying in their respective names. You can open Bank and Demat Account of any person, even in case of a minor baby through “Janma Darta” Document and then apply for shares in his name online.

Some notable examples, IPOs of some recent Companies (All Face Value 100) have reached many times more eg Jyoti Life Rs 800, Mahila Laghubitta Rs 5000, NIFRA 600, Chandragiri Hills 2500, Prabhu Life 900, NIC Asia Laghubitta 1800, NRIC 1700 and many more in just past few months.

If you still have confusion on what to do and how to do, you can consult once to any of your relatives or any person having sound knowledge on share market.

 

 

 

 

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2 Comments

  1. capital market in Nepal, share always be on hike. Everybody invest on it. What will be the future of share market?

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