How to Earn Money from the Share Market in Nepal
The stock market is one of the most popular ways to build wealth in Nepal. Many people have made significant profits by investing in stocks, but at the same time, others have faced losses due to a lack of knowledge and strategy. If you are interested in earning money from the Nepalese share market, this in-depth guide will help you understand how to start, what strategies to follow, and how to minimize risks.
1. Understanding the Share Market in Nepal
The share market (or stock market) is a place where people buy and sell shares (ownership units) of publicly traded companies. In Nepal, the stock market is regulated by:
- Nepal Stock Exchange (NEPSE): The only stock exchange in Nepal where shares are bought and sold.
- Securities Board of Nepal (SEBON): The regulatory authority that monitors and manages stock market activities.
- Central Depository System (CDSC): The system that keeps records of your shares digitally.
When you buy shares, you are purchasing ownership in a company. If the company performs well, its stock price rises, allowing you to sell at a profit. If the company performs poorly, the stock price falls, leading to losses.
2. How to Start Investing in Nepal’s Share Market
If you are new to the stock market, follow these simple steps to get started:
Step 1: Open a Demat Account
A Demat (Dematerialized) Account is necessary to hold shares electronically. You can open one at:
- Banks (such as NIBL, NMB, or Global IME)
- Stockbroker companies
Documents required:
- Citizenship certificate
- Passport-sized photo
- Bank account details
Step 2: Get a MeroShare Account
MeroShare is an online platform provided by CDSC Nepal that allows you to apply for Initial Public Offerings (IPOs) and manage your shares. You can request MeroShare access when opening a Demat account.
Step 3: Find a Stockbroker
To buy and sell shares in NEPSE, you need to register with a licensed stockbroker. You can choose a stockbroker from the list available on the NEPSE website.
Step 4: Fund Your Trading Account
Before buying shares, you need to transfer money to your broker’s bank account. The minimum investment amount depends on the stocks you choose.
Step 5: Start Buying and Selling Stocks
Once your account is set up, you can begin investing in stocks either through:
- NEPSE Online Trading System (NOTS)
- Your stockbroker’s trading platform
3. Ways to Earn Money from Nepal’s Share Market
There are multiple ways to make money in the share market. Let’s explore the most effective strategies.
A. Investing in IPOs (Initial Public Offerings)
One of the safest ways to start investing is by applying for Initial Public Offerings (IPOs). These are newly issued shares of a company entering the stock market for the first time.
Why IPOs Are Profitable?
- IPO shares are usually offered at a low price.
- Once listed on NEPSE, their value often increases.
Example:
In 2023, Ridi Power Company Ltd. issued an IPO at NPR 100 per share. After listing, its stock price reached NPR 400, giving investors a 300% profit.
B. Buying and Holding Stocks (Long-Term Investment)
If you want to build wealth, long-term investment is the best strategy. This means holding stocks for several years until their price increases significantly.
Best Types of Stocks for Long-Term Investment:
- Blue-chip stocks (Strong and stable companies like Nabil Bank, Nepal Telecom)
- Dividend-paying stocks (Companies that provide annual cash payments to shareholders)
- Growth stocks (Companies with high potential for future growth)
Example:
In 2015, Nepal Telecom's stock was around NPR 600 per share. By 2024, it had grown to NPR 1,400 per share, doubling investors’ money.
C. Trading Stocks (Short-Term Buying and Selling)
If you want quick profits, stock trading is an option. This involves buying stocks at a lower price and selling them when prices rise.
Trading Strategies:
- Swing Trading (Holding stocks for a few weeks or months)
- Day Trading (Buying and selling stocks within a single day)
Example:
- In March 2024, the stock price of Hydroelectricity Investment and Development Company Ltd. was NPR 300.
- By April 2024, it had increased to NPR 400.
- Traders who bought in March and sold in April made a 33% profit.
4. Tips to Succeed in Nepal’s Share Market
A. Research Before Investing
- Check the company’s financial reports.
- Look at past stock price trends.
- Read news updates about the company.
B. Diversify Your Investment
Never invest all your money in a single stock. Buy shares from different industries (banks, hydropower, telecom, insurance) to reduce risks.
C. Avoid Emotional Decisions
Many investors panic when stock prices drop. Stay patient and follow a strategy rather than making emotional decisions.
D. Invest Only What You Can Afford to Lose
The stock market is unpredictable. Invest wisely and never use money meant for daily expenses.
5. Risks of Investing in the Nepal Stock Market
While the stock market offers great opportunities, it also has risks. Understanding these risks will help you avoid losses.
A. Market Fluctuations
Stock prices can rise and fall due to political, economic, or global events.
B. Poor Company Performance
If a company performs badly, its stock price can drop, causing losses.
C. Lack of Liquidity
Some stocks have low trading volumes, making it difficult to sell them quickly.
D. Fake News & Market Manipulation
Beware of misleading rumors and pump-and-dump schemes where stock prices are artificially inflated.
6. Future of Nepal’s Stock Market
Nepal’s stock market is growing rapidly, with more companies getting listed on NEPSE. Some expected trends include:
- More hydropower and banking stocks entering the market.
- Digitalization making trading easier for investors.
- Increased foreign investment, boosting market growth.
Conclusion: Is the Share Market a Good Investment in Nepal?
Yes, but only if you invest wisely! The Nepalese share market offers great potential for earning money, but it also requires patience, research, and strategy. Beginners should start with IPOs and long-term investments, while experienced investors can explore trading strategies.
By following this guide, you can confidently invest and earn money in the share market. Start small, learn continuously, and build your wealth step by step.