Nepal's Stock Market: A Vital Financial System

The stock market is a primary and secondary market where securities are traded. It is collectively referred to as the capital market, where capital is pooled together in various ways and traded in the form of shares.

To be more specific, the stock market is also expressed as the secondary market for securities, known as the stock exchange. However, it is not limited to just the secondary market but encompasses a broader scope. This includes the issuance and trading of primary shares, various types of securities and financial instruments of listed companies, and the trading of shares from companies that are either in the process of being listed or have been delisted, through the OTC market.

In the context of Nepal, various types of tradable securities are currently being traded in the stock market. The stock market is a crucial part of any country's financial system, where companies raise the necessary financial resources by issuing their shares and other financial instruments, and where investors (both individuals and institutions) buy and sell these listed shares and securities. This enables individuals and institutions to invest, build wealth, and participate in business and economic development. It helps companies raise capital by issuing shares to the public and provides investors with opportunities to achieve higher returns through investment in securities.

The Securities Act 2063 (2007) defines the stock market as not just limited to shares or stocks but as a securities market where various types of securities are traded. According to the Securities Act 2063, the term 'securities market' means a market, place, or facility where the continuous trading, buying, selling, or exchange of securities is conducted.

A securities market is essential in any country. Without the establishment and development of a securities market, capital mobilization and entrepreneurial development are nearly impossible. The development of a stock market is necessary to mobilize the capital needed for the economic development of a country. However, investing in the stock market inherently carries risks. Anyone investing in the market must conduct thorough research and analysis of the inherent risks and consider their investment objectives and risk tolerance.

Interest in the stock market has increased in recent years. New investors are joining the market every day by applying for IPOs from the primary market and trading in the stock market. Discussions about the stock market are common in government, parliament, media, and public forums. The youth are particularly attracted to stock trading.

For many, investing in stocks has become a way to earn money and build long-term wealth. Currently, not only individual investors but also institutional investors are increasing in the stock market. The scope and area of the stock market are expanding. Despite this, there is a lack of basic understanding and knowledge about the stock market among investors.

The stock market plays an important role in the economy by gathering scattered capital from the public and aiding the development and expansion of business companies. It provides opportunities for investors to invest and build wealth. It is essential for investors to develop the habit of researching the economic and managerial aspects of the companies they invest in.