How to Start Investing in Nepalese Share Market : A Beginner’s Guide 2022

Investing is the process where you can make your money work for yourselves. The main goal of investment for any investor is to grow money over time. Reward and Risk are the part of any investment. You can invest in various fields like business, real estate, gold, share market and various other sectors. Share Market can be considered as the initial platform to start investing and gain investment experience. There are lot of people who are willing to start investing in Nepalese share market but lacks knowledge on how to start.

Share Market is where exchange of shares or stock of a publicly listed companies are done. Investment in share market is done through licensed broker companies. Shares of Private organisations can be traded privately in exchange for equity of a company. To be a successful investor in share market you must have patience. Money can be made or lost during investment in share market which depends on the investor as well as market conditions.

Here we teach you how to start investing in Nepalese Share Market :

What You Need ?

Bank Account –

Bank Account is an account to hold your money or an account through which you pay for shares you purchase or where you receive amount of cash dividends for the shares you hold.

Demat Account –

Demat Account is an account to hold shares, mutual funds and debentures in electronic form. So It is a must have account to participate in primary and secondary market.

Mero Share –

An application created for investors of capital market by CDSC ( CDS and Clearing Limited ) which is used for applying IPOs, FPOs, Right Shares , Mutual Fund and Debentures. This application is also used for EDIS ( Electronic Delivery Instruction Slip ) Purpose after sales of share from secondary market.

Trading Management System ( TMS ) –

Commonly know as broker account, it is platform used in secondary market for online trading of shares.

What You Need to KNow About ?

Primary Market –

It is the part of share market which deals with the initial issuance of shares, mutual fund and debentures to general public. Different Companies issues or sells securities for the first time after approval from SEBON ( Securities Board of Nepal ) to Investors.

Secondary Market –

It is the part of share market where shares that are issued in primary market are traded. Investor trades securities that they have bought from the primary market.

Where TO Invest ?

IPO –

IPO, commonly known as Initial Public Offering is a fundraising process of public limited companies by issuing shares for the first time to general public. Employees, local people and general public can invest in IPOs of companies. And after the issue, shares purchased can be traded in secondary market.

FPO –

FPO, commonly known as Follow on Public Offering is a fundraising process of companies which has already issued IPOs. .

Right Share –

Right Share is the issue of shares by a company to its existing shareholders at discounted price. So only the people who holds the shares of that particular company within a pre-determined book close date can apply for right share. It is usually issued at Rs 100 per unit to existing share holders.

Mutual Fund –

Mutual Funds is a professionally managed investment fund made by collecting money from numerous investors, so to invest in securities like shares, bonds and short term loans. Per unit cost of Mutual fund is Rs 10 at the time of initial issuance.

Debenture –

Debentures are what institutions offers to general public for raising long term debt at fixed rate of interest. Per unit cost of debentures is Rs 1000 in Nepalese Market. As per rule you have to fill an application for at least 25 units.

Secondary Market –

And you can also buy shares from secondary market of the companies you prefer from other investors through licensed brokers.

How Much Money Do You Need to Start ?

You can begin investing in primary market with as little as 1000 rupees for IPOs and Mutual Funds. Per unit cost of IPOs may differ if the shares are issued by book building process. Whereas you will need at least 25000 rupees to invest in debentures.

To start investing in secondary market, the amount required depends on the LTP ( Last Trading Price ) and quantity of the shares you want to buy. For Example : If you plan to buy 10 unit shares of Nepal Bank Ltd. whose LTP is Rs 345. You will need Rs 345 × 10 + Broker Commission + SEBON Fee + DP Charge. The amount will be equal to Rs 3489.32

Conclusion

You can start investing in Nepalese Share Market with as little money as you have. But you must be aware of fluctuations that occurs in share market. You should buy shares of company after analyzing its financial conditions and some research. You should only in invest in shares of business you understand. Its better if you begin investing with primary market as it comes with low risk. You should stay updated on any existing or upcoming issues of shares so that you do not miss it.