I created @nepsetrader on Instagram to build a community of investors. Networking pays, and the page is my way of connecting with people who have the same drive as I do.
Now, most of the people I talk to on the Instagram page are newbies. They remind me of myself when I was starting out on my investing journey.
I occasionally get dumb questions (in a cute way) from the newbies. I do not mind them at all. I actually encourage them to ask whatever comes to their mind. That is how one learns a completely new topic. After all, they are talking to someone who did not know what “kitta” meant when he started.
I now know that “kitta” in Nepali simply means a unit of stock. 10 “kitta” is 10 units of stock or 10 shares. In this article, I list down the last 10 questions I received on my Instagram page asked by stock market newbies.
1) What is the best bank to use for stock trading in Nepal?
We trade via a stockbroker company on Nepal Stock Exchange, not from a bank.
You will have to open a trading account in one of the 50 licensed stockbroker companies of Nepal. Nonetheless, you will have to open a Demat account from a bank. But note that you can open your Demat account from the broker company itself.
Just to make things simpler, you need a Demat account to apply for IPO shares. A Demat account also stores your shares just like a bank account stores your money. You then need a Meroshare account to apply for IPOs online and also to settle your transactions. The Meroshare account can be opened while you open your Demat account.
After you have a Demat account and a Meroshare account, you can open a trading account. Your broker will then email you your login details to trade online.
All clear now, grasshopper?
2) How can I sell the IPO shares that I bought recently?
I have created an entire article for that. Here you go. 🙂
3) What does bullish mean in the stock market?
A user asked me this question when I created an Instagram story poll to see if people were bullish or bearish about the upcoming trend. These words are actually confusing for a beginner. But these are all the most commonly used words in the stock market world.
All your confusion on this topic will be cleared by this article.
4) When does NEPSE open?
The secondary market is the real stock market. That is where people buy and sell shares. The secondary market is where fortunes are made (and lost). If you have only been applying for IPOs until now, you are only dabbling in the primary market.
The secondary market opens at 11 am in the morning and closes at 3 pm. NEPSE remains closed every Friday, Saturday, and during government-declared national holidays.
5) What are mutual funds?
A mutual fund is a professionally managed pool of money collected from investors to invest in securities. Securities mean investment assets like stocks, bonds, money market instruments, etc. In Nepal, there are a total of 20 mutual funds. They are all managed by different commercial banks of Nepal. More specifically, such funds are managed by the Investment Banking subsidiary of each commercial bank.
If you have not learned the skills of investing but want to reap the benefits from investing, you can invest in mutual funds. Once you put the money, the fund managers will invest according to their strategy and hopefully give you a profit.
However, investing in mutual funds is not that profitable in Nepal. Perhaps this article will explain why.
6) Can you recommend me a broker? Please?
We can trade online in NEPSE now. I buy and sell all my shares from my laptop and receive payment on my bank account electronically.
Nonetheless, it is better to choose one near your home or office just in case you have to visit them someday. Otherwise, all broker offices are the same, like shit. You’ll know why I said that after a few frustrating interactions with whichever broker you choose.
Late payments, bad customer service, not picking calls on time, are some complaints that investors in Nepal have for the broker companies.
7) Any views on [THIS STOCK OR COMPANY]?
I get this query so often, just the company or stock is different every time.
I do not give stock tips to anyone. All I can do is give you my trading strategy and comment on whether a stock is considered good for investment by my strategy. Strategies are numerous, and no strategy can sort every single stock that performs well.
8) When will Sarbottam Cement Limited issue its IPO?
Sarbottam Cement has concluded the issue manager signing ceremony on March 17 this year. This is going to be the first company to issue an IPO via the book-building process.
Until now, IPOs were offered at a flat Rs. 100 per share. This meant that investors were immediately in a profit when these shares were listed in NEPSE and the supply-demand mechanism took the price near its intrinsic value. From now on, NEPSE will follow a bit more scientific approach to valuing IPOs.
Now, institutional investors will be able to value the price before the IPO is issued to the general public. First, the company that proposes to issue its IPO will quote a price per share. Now, generally, people and companies are biased. They will want to keep a higher quotation since each extra rupee per share increases the profitability of the company.
However, institutional investors are there to keep things in check. They will analyze every detail about the company and determine if the quoted price is justified. Only then is the company allowed to issue an IPO at that price to the general public.
Since this is a long process, we can’t really say when the company will issue its IPO. Keep checking the news portals that cover Nepal’s securities market to stay updated.
9) Do you consider company fundamentals or are you exclusively a technical trader?
While writing this, I am a technical trader and chart reader exclusively. More specifically, I follow the momentum trading approach to investing.
10) When is the best time to buy any shares?
You actually want to find the best time for the most profitable execution of your strategy. Some investors do fundamental analysis. They study exactly what makes the company profitable in the future. This group treats stock like a business. Behind every stock is a company that does business. Your work as an investor is to find out what it does and how good it does it.
Others do technical analysis. Like me. They look at charts and try to predict the next market move based on current signals. This group thinks that investor psychology and sentiments affect prices more than company fundamentals.