Understanding the Nepal Stock Market:
A.
Basic Terminologies:
1. NEPSE:
It is a short form for Nepal Stock Exchange. It’s a platform where transaction for sale and purchase of listed shares take place.
It is a short form for Nepal Stock Exchange. It’s a platform where transaction for sale and purchase of listed shares take place.
2. Share:
In Nepal, a share normally has a value of 100. Total shares held by all shareholders form capital of company.
3.
Listed Shares:
The shares of an issuer that are traded on the stock exchange (NEPSE in Nepal).
The shares of an issuer that are traded on the stock exchange (NEPSE in Nepal).
4.
Broker:
A brokerage firm is an agent when it acts on behalf of the client in buying or purchasing of shares. You can't directly buy and sell shares. Instead transaction takes place through broker, which charges commission on each buy and sale
A brokerage firm is an agent when it acts on behalf of the client in buying or purchasing of shares. You can't directly buy and sell shares. Instead transaction takes place through broker, which charges commission on each buy and sale
5.
Ask/Offer:
The lowest price an owner is willing to sell the stocks
The lowest price an owner is willing to sell the stocks
6.
Bid:
It is the highest price a buyer is willing to pay for a stock. It is opposite of ask/offer.
It is the highest price a buyer is willing to pay for a stock. It is opposite of ask/offer.
7.
Initial Public
Offering (IPO):
The company's
first issue of shares to general public. IPOs are issued by smaller, younger
companies seeking funds for expansion and growth, but large companies also
practice this to become publicly traded companies.
8.
Dividend:
A portion of the
company's earnings decided to pay to its shareholders in return to their
investments. It is usually declared as a percentage of face value. It is
usually decided by the board of directors of the company.
9.
Face value:
It is the cash
denomination or the amount of money the holder of the individual security going
to earn from the issuer of the security at the time of maturity. It is also
known as par value.
10. Bear Market :
A market in which
stock prices are falling consistently.
11. Bull Market:
A market in which
the stock price are increasing consistently.
12. Close Price:
The final price
at which the stock is traded on a given particular trading day.
13. Blue Chip Shares:
Stocks of large,
well-established and financially-sound companies which hold a record of
consistently increasing rate of paying the dividends over decades to its stock
holders. Blue chip stocks typically have a market capitalization in thousands
of crores.
14. Commodities:
Product used for
commerce that are traded on a separate, authorized commodities platform.
Commodities include agricultural products and natural resources.
15. Debentures:
A type of debt
instrument that is not secured by physical assets or collateral. Debentures are
backed only by the general creditworthiness and reputation of the issuer. A
debenture is an unsecured form of investment.
16. Mutual Fund:
A pool of money
managed by experts by investing in stocks, bonds and other securities with the
objective of improving their savings. These experts will create a diversified
portfolio from these funds.
17. Portfolio:
Holding of any
individual or institution. A portfolio may include various types of securities
of different companies operating in different sectors.
18. Price Earnings (P/E) Ratio:
A valuation of
companies last traded share price to its latest reported 12 months earnings per
share. For example, if the last traded share price of any X company is INR 40
and earnings over a last 12 months per share is INR 2, then the P/E ratio of
that X company is INR 20 (40/2)
19. Earning Per Share (EPS):
20. Strike Price:
The price at
which the holder of an option can buy (in case of call option) or sell (in case
of put option) the securities they hold when the option is executed.
B. Types
of Market:
1.
Primary Market.
2.
Secondary Market.
C. How
to apply for IPO(Initial Public Offering):
1.
Open a bank
account in any bank.
2.
Open DMAT Account
from any capitals.
3.
Bank will provide
you CRN number. With this you can link your DMAT with Bank Account.
4.
Also ask for
Meroshare account (username and password). This will be provided when you open
DMAT Account.
5.
From Meroshare
you can track everything.
Note:
- Generally you can apply with minimum of NPR 1,000 (100 shares of 10 each).
- These days in case of similar companies, you'll be alloted only 10 shares everyone gets the share as far possible and there are generally more applicants.
- It's recommended to have DMAT accounts of all your family members and apply for IPO. With this you have more chances of getting more shares
D. How
to trade with shares in Secondary Market?
1.
Open account with
a broker.
2.
You can also opt
to online trading.
3.
With this you can
do all the transaction from home.
E. Reference
Websites:
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