Nepalese Stock Exchange Trading

Nepalese Stock Exchange trading began in 1994 when the exchange, known as NEPSE for short, was first established. In May 2021, it had a total market capitalisation of approximately NPR 3.92 trillion. This guide will provide a complete definition and tell you how to get trading on the NEPSE, with information about its online trading system, how to register for an affiliated broker account and tips on how to make the most of trading on the NEPSE. We have also compiled a list of the top brokers for Nepalese Stock Exchange trading below.

What Is The Nepalese Stock Exchange?

Located in Kathmandu, Nepal, the Nepalese Stock Exchange (NEPSE) is the country’s only stock exchange. It opened its trading floor in January 1994 and now has a market capitalization totalling approximately NPR 3.92 trillion. There are over 285 listed companies, with 26 mutual fund schemes, 23 of which are closed-end and 3 of which are open-end.

The Nepal Stock Exchange Ltd is a primarily government-owned company, registered under the Companies Act 2006 and operating in line with the Securities Act 2007. The NEPSE is regulated by the Securities Board of Nepal (SEBON). The Nepalese government owns 58.66% of the NEPSE, followed by Nepal Rastra Bank (14.6%), Employees Provident fund (10%), Rastriya Banijya Bank (6.14%), Laxmi Bank (5%), Prabhu Bank (5%) and members/brokers (0.6%).

The Nepalese Stock Exchange trading centre was created to enable the trade of listed securities, encourage market liquidity and contribute to the economic development of Nepal via capital formation and mobilisation. It aims to be the leading regulatory body in terms of market operations, listed companies and securities dealers in the region.

Investors can trade the exchange’s listed securities through member brokers. The Nepal Stock Exchange facilitates the buying and selling of securities to investors through 100 licensed brokers, some of which have remote work stations (RWS) in Pokhara, the country’s second-most populous city, and across Nepal

nepal stock exchange trade management system login

A Brief History

In 1976, around 2033 BS in the Nepali calendar, the Nepalese government created a centre for buying and selling securities. Originally known as the Securities Exchange Centre, it was named Nepal Stock Exchange Ltd in 1993.

Nepalese Stock Exchange trading has traditionally been an in-person affair, with traders needing to visit a broker’s physical location to trade. The NEPSE was much slower to introduce technology into the market than the more developed exchanges, such as the LSE. Its first online trading system, named NOTS, was launched only in 2018 and the adoption of online trading was initially slow.

Nepalese traders, resistant to change, preferred to visit brokers directly rather than use the internet. However, when the COVID-19 crisis hit in 2020, the Nepalese stock market took a huge nosedive. Brokers were closed but online trading was still viable, shifting the demand for trading to the web.

Nepalese Stock Exchange Trading

Nepalese Stock Exchange trading can be broken down into two share markets: the primary and the secondary markets. In the primary market, the following securities are issued directly by a company or institution:

  • Stocks & Shares – Partial ownership of a company that entitles the owner to a share of the firm’s profits, also known as dividends
  • Debentures or Bonds – Government-backed debt
  • Mutual Funds – A company that pools money from small and institutional investors and invests in stocks, bonds, and other securities
  • Initial Public Offerings (IPOs) – When a company is listed on the stock exchange for the first time
  • Right Shares –  When current shareholders receive the first right to purchase shares at a base rate

Shareholders in the secondary market, as legal owners, can sell the stocks that they obtained through both the primary market and secondary market. They do so via the Nepal Stock Exchange.

Nepalese Stock Exchange trading volume has traditionally been focussed on the primary market, with traders holding on to their securities once purchased. However, the secondary market is increasing all the time.

Nepalese Stock Exchange Trading Indices

When Nepalese Stock Exchange trading, it is useful to be aware of the following indices as a guide to the strength of the market.

NEPSE Index

The NEPSE index is the composite value-weighted index of all securities listed on the Nepalese Stock Exchange. Unlike the indices of other major stock exchanges around the world, like the S&P 500 and the National Stock Exchange of India’s NIFTY 50, both of which are calculated based on selected representative stocks, the NEPSE Index shows the aggregate growth in capitalisation of all companies listed in the Nepalese Stock Exchange trading centre. The NEPSE index reached an all-time high of 3,004.33 on 30 July 2021.

Other indices in the NEPSE index family can also provide investors with valuable information, we’ve listed some of the most interesting below.

Sensitive Index

Unlike the NEPSE Index, the sensitive index is only calculated from the market capitalisation of selected companies that fulfil the following criteria:

  • More than 1,000 ordinary shareholders
  • Minimum paid-up capital of NPR 20 million
  • Minimum of three consecutive years of profitability
  • Publication of annual report within six months of the end of the fiscal year

Float/Float Sensitive Index

In stock markets, float refers to the number of shares that are actively being traded. When Nepalese Stock Exchange trading, investors need to be aware of the stock market’s float status as it illustrates the actual number of any shares in the market.

In Nepal, all companies have both promoter and public shares, both of which are listed on the Nepal Stock Exchange. Although the promoter shares are listed, they are rarely traded as most investors tend to keep ownership of these for a longer period. This ultimately declines the float of the shares market.

The Nepalese Stock Exchange trading centre does not calculate the float in public shares, therefore the float index takes the ordinary shares of all listed companies to determine its index value.

The float sensitive index does the same for the companies that are eligible for the sensitive index. It only considers the ordinary shares of high-performing stocks, helping investors to see where larger companies are headed.

Sub-Indices In The Nepalese Stock Exchange

There are 13 sub-indices to be aware of when Nepalese Stock Exchange trading. These are categorised by the following sectors:

  • Manufacturing & Processing
  • Non-Life Insurance
  • Development Bank
  • Hotels & Tourism
  • Life Insurance
  • Mutual Funds
  • Microfinance
  • Hydropower
  • Investment
  • Banking
  • Finance
  • Trading
  • Other

Index-based Circuit Breakers

The Nepalese Stock Exchange trading index-based circuit breaker applies at three stages of the NEPSE index movement: 4%, 5% and 6%. When triggered, these circuit breakers bring a trading halt to all securities.

  • 4% – In case of an upward or downward 4% movement, the market would stop for 20 minutes if the movement took place in the first hour of trading. Otherwise, there is no trading halt after 12:00 NPT.
  • 5% – A 5% movement would halt the market for 40 minutes if it happened before 13:00 NPT. Again, otherwise, it would not be halted.
  • 6% – A 6% movement would halt trading in a security for the rest of the trading day.

Nepal Stock Exchange Trading System

In November 2018, the Nepalese Stock Exchange trading centre launched the NEPSE Online Trading System (NOTS), a fully screen-based automated trading system, allowing investors to place orders online. Trading, clearing and settlement can also be done electronically on NOTS.

The Nepal Stock Exchange Trade Management System (NEPSE TMS) has enabled the online trading of shares by connecting investors to the broker’s system and NEPSE. Each broker will have its own individual TMS URL that corresponds to its unique broker number. For example, Nepal Stock House Pvt Ltd is a member of the Nepal Stock Exchange and is broker no. 14.

To invest, a trader must simply sign up to a stockbroker registered with the Nepal Stock Exchange Trade Management System and create a Nepalese Stock Exchange trading account. Once they have done this, they can log in to NOTS. There are around 60 domestic brokers participating in the Nepal Stock Exchange Online Trading System (NOTS), all of them located within Nepal. Foreign investors are prohibited from entering the market due to local legislation. A full broker list is available on the NEPSE website.

Nepal Stock Exchange Website

According to the Nepal Stock Exchange wiki page, it recently launched a live ‘beta version’ of its website. This is not the website that automatically comes up on a standard Google search, so it can be tricky to find for those not in the know.

The official website for the Nepal Stock Exchange hosts a huge amount of useful knowledge available to traders. In fact, the NEPSE website’s home page shows live trading data, including today’s live price chart, historical graphs, including live market depth, and the trading floor sheet.

Investors can also access candlestick charts on the Nepal Stock Exchange website, enabling them to determine price movements based on past patterns, including yesterday’s rates. Other information includes Nepalese Stock Exchange trading holidays for 2020 and 2021, new Initial Public Offerings (IPOs), IPO results, Stock Live and right share eligibility.

At the end of 2020, the Nepal Stock Exchange (NEPSE) launched a directory for the use of its real-time and historical data. Before this, data providers had been scraping data from NEPSE’s website. Now, financial institutions, news portals and investors can access market data ethically by paying a fee. NEPSE will provide an API for its users that ask for the data.

Also listed on the Nepal Stock Exchange website are vacancy notices for jobs at the exchange for 2077 (the Nepali calendar for 2020). The posting’s application form and syllabus (job description) are available to download too.

Nepalese Stock Exchange Trading Hours

The Nepalese Stock Exchange trading and opening hours are between 11:00 and 15:00 NPT (UTC+5:45). Trading on the Nepal Stock Exchange takes place on all days of the week except Saturdays and any holidays declared by the NEPSE in advance.

On Fridays, only odd lot trading is permitted between 11:00 and 15:00. Odd lotters are investors that buy shares or other securities in small or unusual quantities. Normally, stocks are traded in blocks of 100 shares, known as a round lot. However, 100 shares may be beyond the means of an individual trader and so the investor can buy an odd lot instead.

In March 2020, SEBON wrote a letter to NEPSE to ask that it extend its business hours by an hour (to 10:30-15:30 NPT) owing to the share market’s bullish trend at the time. However, it is not believed to have taken effect yet.

In April 2021, the Nepal Stock Exchange announced that it would remain open during the implementation of a prohibitory order in the Kathmandu valley to stop the spread of COVID-19. Due to the introduction of NOTS, Nepalese Stock Exchange trading could continue online. This contributed to a market shift that has meant Nepalese Stock Exchange trading is increasingly virtual.

Nepalese Stock Exchange Trading Online

How To Start Day Trading On The Nepalese Stock Exchange

To start Nepalese Stock Exchange trading, investors will need an approved bank account, which requires a citizenship certificate. NEPSE does not allow foreign investors to own or trade any publicly traded stocks on listed companies. A 2016 Foreign Investment Act enables non-resident Nepalese citizens to invest in Nepalese stocks through the secondary market by purchasing shares of companies listed on the NEPSE.

Get A Demat Account

To invest in the Nepalese stock markets, either primary or secondary, a demat (dematerialised) account is compulsory. A Demat account allows investors to hold shares in an electronic form. Similar to a bank account, the stocks that you buy and sell are debited and credited to your Demat account.

The company managing your Demat account is known as a depository participants (DP) holder, licensed by the Central Depository System and Clearing Ltd (CDSD). The DP holder will provide you with your beneficial owner ID number and will charge between Rs100 to 150 annually for Demat account management

Choose A Broker

The Nepalese Stock Exchange trading system is currently only available to brokers, so you need to open an account with one. Here are some other things to consider when choosing which broker is the best fit for Nepalese Stock Exchange trading:

  • Regulation & Exchange Membership – Brokers trading the NEPSE must be registered members of NEPSE and regulated by SEBON.
  • Trading Platform – Currently, the NOTS system (the new online trading platform) is only available to registered NEPSE brokers. Therefore, you’ll need the broker’s website order entry form or phone number to execute trades and receive confirmation.
  • Commission & Fees – Broker charges can frequently add up and cut into your profit, so be aware of their fee structure before signing up.
  • Customer Service – Being able to contact your Nepal Stock Exchange registered broker is a big plus, so be sure to do your research into how responsive they are before you start trading.

In August 2020, the Nepalese Stock Exchange trading centre issued the instruction to its broker companies that KYC registration forms and trading platform applications could be submitted online. This means investors can now register without physically visiting the brokers’ offices. Even legal documents can be uploaded online.

For International Investors

While non-citizens of Nepal are prohibited from directly trading on the Nepalese Stock Exchange trading centre, there are still ways to speculate upon the performance of the Nepalese economy. Some international brokers will offer ETFs or CFDs on indices that track the performance of the NEPSE or specific portions of the Nepal economy. Additionally, trading forex pairs involving the Nepalese Rupee (NPR) provides a less direct opportunity.

NEPSE Tips

News

The latest news can impact stock price movements, so traders need to keep ensure they’re up to date as it can give them a competitive edge. The Nepal Stock Exchange Investors Forum is a private Facebook group that enables traders of the NEPSE to share their experiences, knowledge and information with each other. It currently has around 57,000 members and is a useful resource for investors.

NEPSE Alpha is a leading stock market portal in Nepal that provides free live technical chart analysis of the Nepalese Stock Exchange trading instruments. The portal provides up-to-date news and information about NEPSE listed companies. Similarly, Merolagani.com is an online financial news portal that provides live stock quotes, live news announcements, quarterly and annual reports, as well as portfolio management and analysis tools.

Mobile Access

The Nepalese Stock Exchange (NEPSE) app is available to download on iPhone only. The Nepal Share Market and IPO Result app are available on Android as well. Both apps bring live stock exchange data, such as live price updates, directly to your smartphone and allow users to monitor and manage their NEPSE portfolio.

The apps provide real-time data for more than 200 companies listed in the Nepalese Stock Exchange trading markets, including floor sheets, historical price data, market shares and contact information.  Users are able to check the list of brokers approved by the Nepal Stock Exchange and redirect to the Trading System Management (TSM) website for a particular broker. The app also allows investors to check on an IPO result and access tools such as the share calculator, which enables users to evaluate the share price and the total profit or loss of a sale.

Initial Public Offerings

Investing in Initial Public Offerings (IPOs) allows traders to purchase company shares listed on the Nepal Stock Exchange for the first time. On the NEPSE, they’re considered to be a fairly safe stock investment option and a quicker way to earn solid returns.

When IPO shares are initially allotted and listed, they can be bought at the minimum price before the stock is publicly traded in the NEPSE. The range in value of the first purchases on the NEPSE must be within three times the company’s book value. For example, if a company’s book value is NPR 70 per share, it can be traded within NPR 70 and NPR 210 for the first transaction. Shares are allotted within 10 days and listed within a month of the issue, making it easier for investors to double or triple their money in a small period.

IPO results are shown on MeroShare, the company website, and the sales manager’s website.

Final Word On Nepalese Stock Exchange Trading

The Nepal Stock Exchange is the only stock exchange in the East Asian jurisdiction of Nepal. Investing in primary securities is only available to Nepalese citizens. However, non-resident citizens can still participate in the market by purchasing secondary securities through the NEPSE. Until recently, the Nepalese market has been of extremely limited access, but the recent introduction of online trading has meant that trade could continue throughout the COVID-19 pandemic, serving the country well during an otherwise devastating time.

FAQs

How Many Stock Exchanges Are There In Nepal?

Launched in 1994, the Nepalese Stock Exchange (NEPSE) is the sole stock exchange of Nepal. Its main index is the NEPSE Index.

How Do I Start Nepalese Stock Exchange Trading?

Firstly, traders must open a bank account and get a mandatory Demat account. Once you have done this, you can choose one of the top Nepalese Stock Exchange registered brokers from a list of more than 50. However, only citizens of Nepal are permitted to purchase primary securities from the exchange, meaning foreign investors are limited by float volume.

Can I Trade On The Nepal Stock Exchange On My Phone?

Yes, the NEPSE had an app for iPhone and Android devices that gives users live stock exchange data directly to their smartphone. You can also monitor and manage your NEPSE portfolio.

What Trading System Does The NEPSE Use?

The Nepalese Stock Exchange trading centre operates on the NEPSE Online Trading System (NOTS), a fully screen-based automated trading system launched in 2018. The Nepal Stock Exchange Trade Management System (NEPSE TMS) has enabled the online trading of shares by connecting investors to the broker’s system and to the NEPSE itself. Each broker has its own individual TMS URL that corresponds to its unique broker number.

When Is The Nepal Stock Exchange Open?

The NEPSE’s opening hours in Nepal Time are between 11:00 and 15:00 NPT. Trading equities on NEPSE takes place Monday to Friday. However, on Fridays, only odd lot trading is done where investors buy shares or other securities in unusual quantities i.e. not in neat blocks of 100.

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