Nepal’s Stock Market: Why Reality is Overpowered by Market Rumors

The stock market is not constant; it never raises its price or drops it in a predictable manner. This volatility sometimes confounds many traders who would like to see either a consistent rise or fall. The truth in this regard is that the market is too complex. There are many factors that affect stock prices, such as market sentiment, economic conditions, and company performances. Traders need to understand that this market has cycles of ups and downs and must prepare for both gains and losses. Investors should know that chasing trends on the basis of short-term movements seldom makes good investing sense. They should rather be looking at a company's longer-term growth potential, with which they are often tempted to react to concocted rumors or emotional responses.

One of the major changes in value-needing behavior by Nepali traders is the thrill of buying high-priced stocks and selling them lower, a reasoned action that does not reflect panic or greed but rather an appropriate attitude: Buy when "Red" and sell when "Green." More than anything else, choosing strong companies that pay consistent dividends would pay off well. These would ensure that most of the money is made in not-so-down markets. The majority of Nepalese traders easily ignore fundamental analysis and instead follow speculation or rumors.  

There are various companies in the real income sector, like Dabur Nepal, worldlink communications, Wai Wai noodles, etc., which could do much for the benefit of the market but have not made it to NEPSE. The market is then further dominated by low-return companies. Most traders, in as much as they are more concerned about rumors, do not research what the scripts they are trading are all about and, as a result, often make emotionally charged decisions rather than sound investing principles.