How To Invest In (NEPSE) Nepali Share Market?
Table of Content
- What is NEPSE?
- How Does NEPSE Work?
- What is a DEMAT Account?
- How To Open a DEMAT Account in Nepal?
- How to Invest in Nepali Share Market?
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What is NEPSE?
NEPSE refers to the Nepal Stock Exchange Limited, the only stock exchange platform located in Singha Durbar Plaza, Kathmandu Nepal. The NEPSE index, also known as the Nepal Stock Exchange index, is the index that is used to measure the performance of the exchange.
The NEPSE index is calculated based on the market capitalization of all the companies that are
listed on the exchange, and it is considered as the benchmark index of the Nepalese capital
market. The index comprises of over 250 companies and is considered as a vital indicator
of the Nepalese economy's performance. Investors utilize it as a benchmark to evaluate
the performance of the Nepalese stock market and economy.
How Does NEPSE Work?
The Nepal Stock Exchange (NEPSE) functions as a centralized platform for buying and selling shares of publicly listed companies in Nepal. It enables investors to purchase or sell shares of these companies through a system of authorized stockbrokers and market makers.
The NEPSE index is calculated based on the market capitalization of all the companies listed on the exchange. Market capitalization is determined by multiplying the total number of outstanding shares of a company by the current market price of one share. The firms with a higher market capitalization will have a greater impact on the NEPSE index.
NEPSE also has a mechanism in place known as circuit breaker, which is designed to limit the volatility of the index. This is activated when the index rises or falls by a certain percentage within a certain period of time. When the circuit breaker is triggered, trading is halted for a certain period of time to allow the market to stabilize.
Summarizing the above information, NEPSE provides an opportunity for investors to buy and sell shares of companies listed on it and the performance of which can be measured by the NEPSE index, the benchmark index of Nepalese capital market. The platform is operated through authorized intermediaries and has measures in place to maintain stability of the market.
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What is a DEMAT Account?
A Demat account, also known as a "dematerialized account," is an electronic account that holds shares and securities, rather than in physical form. In Nepal, having a Demat account is a requirement for trading in the stock market as all shares are held and transferred electronically. To open a Demat account, one needs to choose a Depository Participant (DP) which is a financial institution or brokerage firm authorized by the Securities Board of Nepal (SEBON) to provide Demat services.
Once the account is set up, the individual can deposit cash or physical shares into the account and use it to place buy or sell orders on the Nepal Stock Exchange (NEPSE). It's worth mentioning that having a Demat account is the first step for an individual to trade in the Nepali stock market, and it's important to be aware of the charges and other rules associated with it.
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How To Open a DEMAT Account in Nepal?
Any Nepali citizen can open their Demat account in Nepal doesn't matter if you are a minor or an adult, you can create a Demat account.
If you are an adult, you need to have the following documents to create a Demat account.
- Citizenship certificate.
- Photo and Citizenship certificate in case of adding a successor.
- Recent Passport size photograph.
In the case of a minor, the account can be opened by the parents till s/he becomes major. In this case, the photograph and birth certificate of the minor along with the photocopy of the guardian’s citizenship certificate is required.
Choose a Depository Participant(DP): First you need to choose a DP in any of financial institutions, stockbrokers, commercial and development banks. I recommend you to open demat account in a bank which is one of the easiest and safest methods.
Submit Form and KYC: After you've chosen a DP as per your requirement, the next step is to fill and submit an account opening form, personal KYC, and meroshare form.
MeroShare is an online software by CDSC which facilitates the beneficiary to view your Demat details online.
Get your BOID Number & MeroShare Details: After the submittion of all the required documents and the application forms, you’ll receive a 16-digits unique BOID from your DP. This means your Demat account has been created successfully. It may take from a few days to a week.
Meroshare is a trading platform for the Nepal Stock Exchange (NEPSE) that allows investors to buy and sell shares electronically. It is a web-based trading system that allows you to access the stock market and place orders directly from your computer or mobile device. With MeroShare you can apply for IPOs online, transfer shares when you sell your stocks, and also do EDIS of your stocks.
How to Invest in Nepali Share Market?
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