KATHMANDU: Nepal’s stock market, represented by the Nepal Stock Exchange (NEPSE), is a vital part of the country’s economic landscape. For those looking to dive into this market, here are ten key facts you must know to get started and make informed investment decisions.
As Nepal’s stock market evolves, it’s crucial for both novice and experienced investors to stay informed about the latest trends and opportunities. Whether you’re exploring NEPSE for the first time or already actively investing, understanding these fundamentals will help you make smarter investment decisions and take advantage of Nepal’s financial growth.
1. NEPSE: The Heart of Nepal’s Stock Trading
Established in 1993, the Nepal Stock Exchange (NEPSE) is the only exchange in Nepal, and it plays a central role in connecting investors to the country’s capital market. Operating under the regulation of the Securities Board of Nepal (SEBON), NEPSE provides a platform for trading shares of listed companies, fostering growth in the economy.

2. Market Capitalization: Reflecting Nepal’s Economic Growth
Over the years, NEPSE’s market capitalization has experienced significant growth, a direct indicator of the country’s expanding economy. Leading sectors such as banking, insurance, and hydropower contribute heavily to the market’s growth. The increasing value of stocks reflects the economic vitality of these core industries.

3. Trading System: A Digital Revolution
In 2018, NEPSE transitioned from a manual trading system to a fully digital platform, the NEPSE Trading Management System (TMS). This digital shift has made trading more accessible and efficient, enabling investors to trade stocks online, from anywhere in the world. The move towards digitalization has opened new doors for both local and international investors.

4. NEPSE Index: Tracking Market Trends
The NEPSE Index is the primary benchmark for the overall market performance, offering insights into how the market is moving. Additionally, the Sensitive Index, which tracks the top-performing companies, allows investors to focus on the strongest players in the market, offering a more refined look at sector leaders.

5. Leading Sectors in NEPSE: Powerhouses of the Market
The financial sector, particularly banking and insurance, along with hydropower and manufacturing, dominate NEPSE. These industries consistently offer high returns and attract substantial investment. Financial institutions, especially banks, contribute the largest volume of trades, reflecting their dominance in the economy.

6. How to Get Started: A Simple Guide to Investing in NEPSE
To start investing in NEPSE, open a Demat (Depository) account and a brokerage account with a licensed broker. After setting up your accounts, you can use the NEPSE TMS platform to begin trading stocks. This digital platform allows for easy access to real-time stock prices and transaction data, making investing straightforward.

7. IPO Frenzy: The Excitement Around Initial Public Offerings
Initial Public Offerings (IPOs) are a huge attraction for Nepali investors. Due to their affordability and potential for high returns, many IPOs are oversubscribed within days of launching. IPOs offer a chance to invest in newly listed companies, often at favorable prices, which adds to their appeal.

8. Dividend and Bonus Shares: Reaping the Rewards of Investing
Many companies listed on NEPSE reward investors with cash dividends or bonus shares. These rewards are particularly common among banks and insurance companies, which often offer attractive bonus share schemes. These dividends and bonuses can be a steady source of income for long-term investors.

9. Challenges Facing NEPSE: Opportunities for Improvement
Despite its growth, the stock market in Nepal faces challenges such as limited liquidity, regulatory hurdles, and market fluctuations. These issues often result in slower market dynamics, making it harder for investors to move large sums quickly. Moreover, there is a significant need for foreign investment to help boost market depth and liquidity.

10. The Future of NEPSE: Embracing Digital Growth and New Investment Opportunities
Looking forward, the future of NEPSE seems promising. With continuous digital advancements and government initiatives aimed at modernizing the market, there is substantial potential for growth. The increasing popularity of mutual funds and Exchange-Traded Funds (ETFs) will likely expand investment options and diversify portfolios for Nepali investors.

(This content structure is created with the use of artificial intelligence. Nepal News is exploring the use of generative AI tools in carefully selected, editorially vetted cases, guided by our commitment to honesty and transparency.)