I still remember my teachers compelling me to memorize the formulas that were associated with stocks. None of my teachers told me or my classmates to make experiments. I think practical knowledge was not in our “syllabus”. Enough with this bitching, now I am trying to get the “practical knowledge” by investing in stock market. I am just a noob, so if you know more than I do please don’t dither to share.
Right after I bought a share for the price of (say) X, the market was going insane, the price went up X+3 and I thanked god for that. After a while the market start to fall and ended up on X-1, phew. Next day I was curious and woke up at 7(ma 8 baje matra uthxu) and started to look for the market live at Nepalstock and NepaliPaisa’s site. I am not as dumb as I look, I know the market opens at 11am and closes at 3pm but the suspense was killing me. When the market started to trade there was a huge drop and it went to X-10. Damn, I just brought 100 stocks, was trying to feel for the person who might have brought 1000 stocks or more. That’s share market you can predict high or low but one can’t forecast by what numbers it will fluctuate.
After a few days of joining, I realized that to invest in the stock you gotta have some person who has some basic ideas (if not advance) in share market of Nepal which can help you a lot. I had a great team with the best of brokers and brothers to get good hands on experience. The Nepali stock market, I realized is highly irrational, and fundamentals and analysis are of minimal help. The size of our secondary market is very small; wherein a handful of investors can easily manipulate the market; the daily average market turnover stands at NPR 900-800 million.
I am kinda optimistic so in my opinion the increasing numbers of trade volume has made the market more well-organized and liquid, reducing chances of share price manipulation, while the capital market currently offers great chance for investors to diversify their investment requirements. If you have not ventured into Nepali capital market yet and want to participate and reap the benefits provided by the market, below are the vital jaankaari which should help you to get started.
1. FIRST: OPEN A DEMAT ACCOUNT
Opening a dematerialized (DEMAT) account (similar to a bank account no) at one of the Depositary Participant (DP) licensed by the Central Depository System and Clearing Limited (CDSC) is a criterion to participate in both primary and secondary market. If you don’t have that friggin account don’t get upset, the brokerage firm through which you trade are going to help you to get the job done.
Now I think, finalizing the brokerage firm that you are going to trade with needs to be priority number one.
If you already have that DEMAT no. from any other bank, provide it to the brokerage firm, they will do the rest. (At least mine did and I did not have to go through all those hassles.)
2. IDENTIFY THE MARKET
To get started in the stock market, it is essential to first understand how the market functions. Securities Board of Nepal ; the sole regulator of capital market is a useful source for primary information. Its website provides information on various securities laws, investor education, and upcoming public issues amongst others. Similarly, the Nepal Stock Exchange the sole secondary market is a great source to get hands on information.
More than them I prefer using NepaliPaisa.com (I wish they paid for this article but must say it’s too good.) There are many other popular websites that provide constant updates about the capital market such as; Share Sansar and Mero Lagani. Furthermore, daily national newspapers provide good information.
3. APPLY IN PRIMARY OFFERINGS
One of the greatest prospects to participate in the capital market is to apply for primary offers in the primary market such as; Initial Public Offering (IPO) or Further Public Offering (FPO). Most companies offer primary issues to the public at face value of NPR 100 per stock, or at a premium based on their valuations. I said most of the companies coz Nepal Dursanchar(NTC) offered its primary issue (IPO) at premium at NPR 600 but is still priced at approx NPR 700. If the share is not issued at premium (offered at face value i.e. RS. 100) then Rs 5000 is the minimum amount that one can apply in IPO.
The risk is lesser when we acquire in the primary market as we get an opportunity to buy shares at a lower cost as compared to purchasing those shares in the secondary market once they are listed. Also look out for opportunities to participate in the primary offering of mutual fund schemes which can be a beginning point.
News about primary issues usually comes out in national newspapers and are widely announced on other media platforms, just don’t be afraid to ask your friends or like some pages which broadcasts news regarding Share market in Facebook.
4. JOIN THE GAME OF SECONDARY MARKET
All the stocks offered through primary market are listed in the secondary market i.e. Nepal Stock Exchange (NEPSE); as of now there are more than 200 share listed in NEPSE.
How much can you earn by applying in primary share market, it’s like a lottery you never know if you are gonna win it. Join the game of secondary market and open a trading account at a stock broker office (you will get your client code) and apply on how much share you want. There are currently 62 stock brokers licensed by NEPSE
If you are starting, start with small. The secondary market offers the platform to sell the shares you hold or purchase new shares from the market. The share price of these listed companies and the value of NEPSE Index changes every day based on total demand and supply of shares in the market.
To make a purchase or sale order you will simply have to call your stock brokers or visit their office to place order (the screen on which they display the stock live is amazing, I prefer going to the office just to see the display..not to mention the Tea they offer..wah Taj!!) , make sure you have the shares in your DMAT account before you place a sale order to your stock broker. The stock broker charges some commission as a brokerage fee (minimum is 0.6%) for each transaction with SEBON commission of 0.015% with the DP fee NPR 25. Finally you have also gotta to pay a capital gain tax of 5% if applicable while making sales (not if you are buying).
5. SEEK PROFESSIONAL HELP
If you are still confused and less assured about entering the market or you do not have time, energy and resources, do not worry you can trust me with your money. I’ll make sure your…I’ll just cut it out. You can ask your family members or phone a friend :V (last I swear) . The brokerage firm (good one) can help you and you can go with the flow or ask any person (who looks like a genius) in the brokerage firm