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Nepse Overview

Nepse Overview

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Published by Pravin Bikram Shahi
how to calculate float index and sensitive float index
how to calculate float index and sensitive float index

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Published by: Pravin Bikram Shahi on Jun 04, 2011
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IntroductionNepal Stock Exchange, in short NEPSE, is established under the company act,operating under Securities Exchange Act, 1983. The basic objective of NEPSE is to impart free marketability and liquidity to thegovernment and corporate securities by facilitating transactions in its trading floorthrough member, market intermediaries, such as broker, market makers etc. NEPSEopened its trading floor on 13th January 1994.Government of Nepal, Nepal Rastra Bank, Nepal Industrial Development corporationand members are the shareholders of NEPSE.History The history of securities market began with the floatation of shares by Biratnagar Jute Mills Ltd. and Nepal Bank Ltd. in 1937. Introduction of the Company Act in1964, the first issuance of Government Bond in 1964 and the establishment of Securities Exchange Center Ltd. in 1976 were other significant development relatingto capital markets.Securities Exchange Center was established with an objective of facilitating andpromoting the growth of capital markets. Before conversion into stock exchange itwas the only capital markets institution undertaking the job of brokering,underwriting, managing public issue, market making for government bonds andother financial services. Nepal Government, under a program initiated to reformcapital markets converted Securities Exchange Center into Nepal Stock Exchange in1993. The only secondary capital market in Nepal, NEPSE operates under Securities Act,2007.Market CapitalizationMarket Capitalization measures the total worth of shares floated in the economywhich is a summation of price per share multiplied by number of shares of eachcompany. At the end of Asadh 2067. The total market capitalization in NEPSE has
reached to Rs. 376.87 billion which is 9.41 percent more thant that of previousquarter end.Group wise composition of market capitalization of listed companies:S.NoGroup(sectors)No. of llistedCompaniesMarketCapitalization (Rs. Inbillion)Composition (InPercentage)1CommercialBanks23206.2854.74%2Manufacturing andprocessingcompanies187.592.01%3Hotels45.291.40%4Others269.0218.31%5Hydro power 419.965.30%6Tradingcompanies41.620.43%7Insurancecompanies199.762.59%8Financecompanies6229.877.93%9DevelopmentBanks4027.497.29% Total176376.87100%Indices:Nepse index group consists of various indices and they are calculated on the basisof market capitalization. Among the major indicators, NEPSE index is the oldest onewhich is being calculated form the initial days of Nepal Stock Exchange. Similarlythe other indices are float index, sensitive index and group wise index.
NEPSE INDEX:Nepse index is calculated by considering all listed shares including the promotershares of all the listed companies in NEPSE.NEPSE INDEX=Base Year is Feb 12
1994 or Magh 30
2050.Float Index:NEPSE started calculating float index from Bhadra 26, 2065 (Base Date). This indexrepresents the market capitalization of securities which are floated to public. Floatindex excludes promoter’s holding, government holding, strategic holding and otherlocked in shares like employees share- that will not come to the market for tradingin the normal course. It takes into account the securities held by general public thatare readily available for trading in the market.Float Index = Current MV of all shares listed in NEPSE floated to general public*100MV of shares in Base yearBase year is 26
Bhadra, 2065 or 11
September 2008.Sensitive Index:Sensitive index is the index calculated from the market capitalization of companiesclassified under group “A”.Sensitive Index = Current MV of all shares listed in NEPSE under Group “A” *100MV of shares in Base year
Current MV of all shares listed in NEPSE*100Market value of all shares listed in NEPSE

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