Share Market of Nepal. Most of all, We should understand what Share Market is. How can we invest in Share Market? How Earning is possible from Share Market?. What are the types of Share Market in Nepal? How to enter inside Share Market? And so on. So, here is the complete process to Enter into Share Market. Investing in it and earning. Below, you will understand some of the basic workflows of Share Market Of Nepal. And below here are some of the Step By Step Process of Share Market in Nepal.
- What Is Share?
- How People Earn By Investing On Share?
- What is the Share Market or Stock Market?
- Types of Share Market?
- What Is the Broker or Middle Man?
- Step By Step Process To Enter Share Market.
Table of Contents
Share is a part or portion of a more significant amount which is divided among several people, or to which several people contribute. Let’s clear it with an example.
Suppose a company wants to open a mini-market cafe which Total Cost Can be Rs 5 Lakh. So the company Arranges the Money of 5 Lakh and start building the Mini market Cafe as The amount is Small.
Let us Take Another Example (B).
A company want to open a hydro project, which is a big project. Assume the total cost will be Rs 1 crore. To start this Project, the company should manage the Money By Taking the Loan form the Bank, which may Cost A Huge Interest if it takes from Bank.
What will The Company Do??
So The Company Arranges The money from The people Or The public.
How company Arranges Money From People? (Share Market)
Company Will open the Share for The people Which means Company Offer Some percentage Of Ownership of the Project. For Example, In above FIG(B), The Company open The Share Of Hydro project, Then people Buy The Share of Hydro Project and Become some Percentage Owner of The Project.
In this Way, Company Collects The Money From The People And Start Building The Projects.
Do All The People Can Get Company Share?
Depending upon The Number of Shares open by the Company and The Number of People to Invest On Share; the people May Or May Not Get Share.
- IF the Company Open 20 thousand Share and 30 Thousand people are applying For Share then 10 thousand people will not get Share which is known as oversubscription.
How Company Calculate The No Of Share To Be Issued?
Suppose The Total Cost For The Hydro Project is RS 1 Crore, The company Only Issue 50% share of The Total Amount As The Share and Rest The 50% The Company Arranges Itself.
To Calculate The Total no Of Share The company use The Formula,
No of Share =Total issued shared capital/ total price per Share.
for example, for a hydro project, 50% is allocated as Share which means,
No of Share = 5000000/ 100(per share prize) =50,000 kitta or unit share allocated by company.
How People Earn By Investing On Share?
As We Know People Buy The Share and Become Some Percentage Owner Of The Company. After The Establishment Of The Company, The Company Start to do the transaction, start to make The profit. The Company Profit will Distribut Among all The share Holders According to their Share Percentage.
As, The Company Makes Profit, The Price Of The Share, Which you Bought Will Increase and You Can Sell The Share Of That Company And Make The Profit.
What is the Share Market or Stock Market?
A place Where We Can Buy And Sell The Share is known As Share Market Or Stock Market.
Suppose a person A, Want To buy The Share of Company Name XYZ from another person B Who want to sell the Share of Same Company XYZ, Then the Process Of Buying and selling is Done.
The Place Where All This Type Of Transaction is Done Is Known as Share Market Or Stock Market. By now, I guess you came to know about Share Market of Nepal.
Types of Share Market?
To Buy And Sell in Share Market, There are Especially Two Types Of Market Available.
- PRIMARY MARKET
- SECONDARY MARKET
Primary Market is also known as ‘the first Bazar’. In Primary Market You Can Only Buy The Share which is Published By The company. W
A Company Issues Their Share Directly To The Investors Or The People In Primary Market. Primary Market Is entirely Risk-Free. IF The Company Open Any Share You can Directly Apply On It.
Here In Primary Market, A company opens a Share For The People and people can Directly Buy The Share from The Company.
In Primary Market The Company Which Issued Share Are Known AS IPO, FPO and Right Share. In This Type, The Company Issue The Share.
- IPO Stands For Initial Public Offering.
- When The Company Issue Their Share for The First Time And Collect The Money From People Then It Is Known as IPO.
- A New Bank ‘OUR Bank’ Is Going to be established. The company opens the Share for the first time and collect the money. This type of Share is called IPO.
- FPO Stand For Further Public Offering.
- When The Same Company issue The Share For The Second Time Then It is Known As FPO.
- Suppose ‘OUR Bank’ has issued its IPO already. Again It wants to expand it’s the branch and want to collect the money, then it open FPO Share For The Public.
In IPO And FPO usually, The prize for one Share or one kitta is RS 100. which means You can buy one stock of the company at RS 100.
So these are the type of Share issued by the company in the Primary Market. There is no risk in the Primary Market. You can buy any share like IPO And FPO issued By company.
Secondary Market is Known As ‘Second Bazar’.
Suppose You buy The Share in Primary Market. Now After Some Days You Like to sell Your Share. So you Have to visit The Secondary Market For it. In Secondary Market, You Can both Buy And Sell The Share.
- Suppose you miss to Invest in IPO Due to Some Reason. Now You Want To buy same Company Share Which You Miss. You Can Visit The Secondary Market And Buy The Share Of The Same prize But The prize will be high in the secondary Market.
- You Can Buy And Sell any company Share In Secondary Market, But The Buying Prize can cost high compare to IPO. Why Is Secondary Market Risky?
Why Is Secondary Market Risky?
- In Secondary Market The Prize Of Share Gets Increased Or Decreased Very fast, which can be hourly or daily.
- You Buy The Share of some company at RS 5000. After one day The Share Prize of That Company decreases. Now you have to sell that Share in low prize maybe 4000, so you get loss of 1000.
- Quick Loss And Quick Gain can see in the Secondary Market, so It’s called Risky Market.
You Buy The Share on Primary Market. After some time the share price increase .you goes to secondary Market and sell The Share, Gets A good Profit. This way You Can earn Good Profit.
What Is the Broker or Middle Man?
Buying and Selling Can be Done Only With The Help Of Broker In The Secondary Market.
IF you want To sell any Share Then, You must Visit The Broker, and The Broker Will help you to Either BUY Or Sell Your Share.
While buying in primary Market, you don’t Need any Broker, but while Selling Or Buying The Share, You Need The Broker In The Secondary Market.
Who Hire The Brokers?
Nepal Stock Exchange Limited(NEPSE) is the Only Stock Exchange Of Nepal. It is located in Singha Durbar Plaza, Kathmandu Nepal. NEPSE was introduced in 1993. And The owner is 58.60% Nepal Government and 34.60% Nepal Rasta Bank.
NEPSE hires or Provides the license to Brokers. The NEPSE collect some Amount of money from Every transaction, which is BUY and SELL done in Secondary Market With The Help Of Brokers. The Broker also Take a Small Amount oF Commission During Every Transaction.
Here Is The List Of Broker Company: click here.
Step By Step Process To Enter Share Market
To enter into Primary Market.
Step 1: Open A Bank Account.
- You First Have To Open The Bank account. You Can Open Bank Account on any bank like SBI BANK, GLOBAL IME BANK, LAXMI BANK etc.
- Required Documents are citizenship Photocopy and three pieces of your photo.
- Bank Account is necessary because When You invest On Share, Your Amount Will is hold For some Days. After the allocation of Share, the money will be deducted from the Bank account.
STEP 2: Open DEMAT Account.
- DEMAT account refers to Dematerialisation account to hold financial securities in electronic form.
- You can Open DEMAT Account In The Same Bank Where you have your Bank account Or In The broker company
- just go to the Bank and ask to open your DEMAT account on it.
- DEMAT account Helps to store the Records of Your Share That How much you Invest ON Share and how much you sell it and so on.
- Some bank can charge RS 100 to Open DEMAT Account.
STEP 3: Taking MERO SHARE Services
- Mero share Also Known As C-ASBA service.
- It is An Electronic Service Through Which you can apply for the IPO, And FPO shares in Primary Market By Sitting In-Home.
- With this service, you Don’t have to visit Bank or broker Office every time To buy The Share.
- In The Bank where you open Your DEMAT account, you can fill The form For Mero share.
- The Bank may charge up to 200 For your Mero share service.
STEP 4: Log in to MERO SHARE and Buy Share
- After following all The Process, you will get login Id AND Password For mero share service from Bank.
- You Can type meroshare on GOOGLE and provide the id password it Requires.
- After opening the DMAT account, you will Get CRN Number(customer recognition number).
- You can see if there is any IPO OR FPO opening as you enter in meroshare.
- CRN number is used while you Try to Buy The Share.
- You can Buy The Share Now.
So, these are some of the steps to enter the Primary Market in Nepal.
To Enter into Secondary Market.
STEP 1: Open The Trading Account From Broker
- visit your nearby broker company, fill up the TMS (Trade management system) form and open trading account in the broker company.
- For Entering Secondary Market You have to Have TMS Account, and This account is only Available in Broker Company.
- TMS account is open by The Broker. And with this account, you can buy and sell the Share.
- IF you don’t open TMS account, then you have to visit every time to broker office to buy and sell a share.
- TMS is The online system. Where you can buy and sell The Share sitting at home.
- Here is the list for broker company:click here.
Step 2: Start to Buy and Sell Share using TMS.
- After you Open TMS account From Broker, you will get client code which you will need while buying and selling.
So, these are some of the steps to enter the Secondary Market in Nepal.
How Can You withdraw your profit amount?
- First of all, the user needs to reach the Bank and ask them to CONNECT IPS in your account.
- CONNECT IPS is a payment system that serves as a standardized single payment platform to facilitate online fund transfer between person to person, government organization to a citizen, government revenue payment etc.
- After you got CONNECT IPS in your account, you can quickly transfer your money from your TMS account to your Bank.
- When you log in to TMS account, you can see fund management option from where you can transfer the fund of your Share to your bank account.
Above, I try to cover necessary information about how to enter into Share Market of Nepal. There is much more Share Market when you go deeper and deeper. So, my advice to all, who came here & read my article to start getting of Basic knowledge of share market and get started.