Why is the share market in Nepal gaining sudden popularity?

The Nepal Stock Exchange (NEPSE) market has seen quite a projecting interest and trading throughout recent times. Investing in the share market in Nepal seems to have a growing popularity among youths. 

Growth of NEPSE

The NEPSE index closed at 1,968.27 ON Nov 29 2020 which is the highest close in the history of NEPSE. The highest close record was previously broken a week earlier. The index had made a new high that day, gaining 75.02 points from earlier week’s close.

25,945,380 shares traded hands via 80,271 transactions. This is the highest number of transactions and shares traded in a single trading day. Trading of 200 scrips brought the total market turnover to a little over Rs. 9.22 Arba. Now, this is also the highest intraday turnover attained in the history of NEPSE. Just when it felt like NEPSE was could not break any more records, the new year was met with a bang!

With a new high almost every day, the NEPSE index gained 18.76 points on 27th Jan 2021 and closed at 2,441.85. This is the highest closing-ever in the history of NEPSE. The index has been breaking records and creating new highs for a long, and there seems to be no stopping.

We can see quite a roller coaster ride of fluctuations in the NEPSE market these days.

WHY IS NEPSE GAINING POPULARITY?

A few reasons why investing in the share market seems to be a wise choice.

  • Earn Money

This reason is pretty obvious, as no one would show any interest if they could not earn any money. The striking feature of earning money in Shares is that you can double the amount! Although the limit is not double if you are good at it.

It is like earning money by storing money if you do not intend to do trading. You can invest now and years later the money would have grown.

  • NEPSE Going online

These days everything is going digital. Hence, even Nepse launched its online trading system in November 2018. 

But, people, wanting to be in the know, always believed in going to the brokers to trade. 

Yet, due to Covid-19, that changed as everyone was bound by online access only. This meant more participation as anyone with a phone or a laptop could trade without having to go to a broker. This goes hand in hand with liquidity and a lack of investment opportunities. As people were stuck at home, they started investing little by little on shares.

  • Lower interest rates on savings

As banks have plenty of deposits, they are providing loans at only 8 percent compared to 13 percent in 2019. That’s why a lot of people have started taking loans from banks to invest in shares. As they feel that the return will be higher than the risk if they do it the right way.

Also Read: Three things to avoid if you are doing a startup in Nepal

THE DANGERS OF NEPSE

Like most things in life NEPSE also has its dark sider full of risks and a huge amount of losses. One biggest risks of trading in the share market is the unpredicted loss of stock value. 

Although company portfolio and technical analysis are ways to stay updated on your stocks there still looms a threat of sudden loss. This is especially threatening for people who invest a huge amount of money.

Another downside of the NEPSE is the false expectations. People are clouded by the idea that their money will double overnight. This is not only impossible but also stupid. It is doubtful that a certain company share will grow at such length at such speeds. People need to go through the entire process with patience. 

The biggest advice for people investing would be to not listen to people’s advice. Sometimes people with no real experience & investing knowledge peer pressure others to buy or sell shares. But you need to understand it is a severe action and requires a lot of analysis rather than just a friend suggesting you.

Ending with a note by the great Warren Buffet himself, “Risk comes from not knowing what you are doing.” So do be very wise and do a thorough analysis before selling or buying your shares. A share market is an unpredictable place that can bring you a lot of profit or loss.

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