Basic Meaning of NEPSE:
Hello everyone welcome to the Nepal Institute of multi-level marketing, in this article you are going to learn about NEPSE /Nepse index. Nepal Stock Exchange (NEPSE) was founded in 1993 AD. It is located in Kathmandu Singha Durbar Plaza. More than 300 companies are registered under Nepal Stock Exchange. As of February 08, 2021, the equity market capitalization of the companies listed on NEPSE was approximately US$30 billion. In simple language, Nepse provides the knowledge related to the stock market of Nepal.
Meaning of NEPSE Index:
Now let’s learn about the Nepse index. NEPSE index denotes the increase and decrease of the whole market capitalization of companies’ transactions which are listed under NEPSE( Nepal Stock Exchange). NEPSE INDEX has vital importance to investors because this denotes the increase and decrease of the total market. Nepse Index helps investors to make analysis and decision of buying and selling of (Small Fraction of Capital ) Share.
Now let’s discuss market capitalization. There is a positive or direct relationship between market capitalization and Nepse Index. It means When the market capitalization increases, the Nepse index also increases and when the market capitalization declines, the Nepse index also declines.
Market capitalization is the market value of a company based on the total value of all its publicly traded outstanding shares. we can not calculate the market capitalization of a company whose securities are not publicly listed.
In simple language, market capitalization is the market price of one share * a number of outstanding shares. Market capitalization is also known as the Market cap. Such as Large cap, Mid cap, Small Cap.
Market capitalization measures what a company is worth on the open market, as well as the market’s perception of its future prospects because it reflects what investors are willing to pay for its stock.
Calculation Method of Market Capitalization:
Now let’s discuss how to calculate market capitalization, to calculate market capitalization we have to multiply the current market price per share with the total number of outstanding shares.
Let’s learn it from a simple example:
Calculate the market capitalization of ABC company if the company’s price per share is Rs 1000 and outstanding shares is Rs 1,00,000.
Price per Share=rs1000
Total outstanding share=rs1,00,000
Market Capitalization=Market Price of 1 share * Total no. of outstanding share
= rs1000 * rs 1,00,000
= RS 100000000(10 cr.)_
Market Capitalization value of Some Nepalese Company:
|Stock Symbol||Name of Company||Market Cap (Rs. In Arba)|
|NTC||Nepal Doorsanchar Company Limited||199.35|
|NABIL||Nabil Bank Limited||178.2|
|NLIC||Nepal Life Insurance Co. Ltd.||158.25|
|NRIC||Nepal Reinsurance Company Limited||148.7|
Sensitive Index in NEPSE:
The market capitalization of companies-( listed under class “A” ) determines the Sensitive index.To be listed on the Sensitive index,a company must have the following criteria:
–Minimum paid-up capital of Rs 2 crore
– more than a thousand ordinary shareholders
–At least three consecutive years of profitability
– book value of share higher than its par value
-publications of the annual report within 6 months of completion of the fiscal year
Calculation of Sensitive index is stared since 2065-Bhadra-26.
Formula to Calculate NEPSE INDEX:
Nepse Index=Current Market cap of all company/Base Market Capitalization of all Company*100
Formula to Calculate Sensitive Index:
Sensitive index=Current Market Cap of A-class Company/Base Market Cap of A-class Company*100
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The float Index is the measurement of the share market concerning the total share owned just by the public. Calculation of float index is stared since 2065-Bhadra-26.
Formula to calculate Float Index:
Float Index=Current Market Capitalization of Ordinary Share/Base Market Cap of Ordinary share*100.
— NIMLM (@NepalMulti) April 29, 2021