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ALL YOU NEED TO KNOW ABOUT SHARE MARKET/ STOCK MARKET

All you need to know about Share Market/ Stock Market

Introduction

Okay, so today we'll be taking a quick drive through the world of Finances. And especially the Share or Stock Market(Whatever you might wanna call it).

Just a quick notice before we start. I will be talking about my home country; Nepal's share Market. So even if you are not a nepali (Someone from Nepal). Do stick around because I am pretty sure this information that I am about to provide will come in handy.

What is Share Market ?? What is the Stock Market ?? What are shares ??

If you are someone like me who wishes to improve his/her finances by investing and if you are someone who is kinda fascinated about the Share or Stock Market then I am pretty sure these are a few set of questions you might be having in your mind. So just grab a note copy and pen because today I am going to clear all of your doubts within this single blog post.

Okay starting off with Shares. I will try explaining it with an example. Okay, so there are two people David and Carl. David plans to establish a company but lacks all the finances he requires. So he contacts Carl to help him with that. And this one is not like the classical lending money or loan but it's rather more like an Investment.
So what I mean by this is. David asks Carl to invest some amount of capital in his company. That capital will be observed as a percentage and as a result David now has extra money by his side to help him with the company establishment. And once the company starts making profit, profit is shared in between David and Carl based on the percentage they hold of that company.

PRIMARY MARKET

Shares

Share is a chunk or a part of a company that someone holds which gives him/her some authority over that company and earns profit based on the amount of percentage of the share they hold of that company. 

Few Terminologies

Here are a few key terminologies you'll need to know before getting more into this topic

Primary Market

Share Market's Phase when you first buy shares of a certain company or organization(The buying phase)

IPO (Initial Public Offering)

Shares opened to be sold to the public (A part of the Primary Market)

SEBON (Security Board Of Nepal)

Legal Board that approves/ disapproves IPO

Secondary Market

The selling phase or the phase where Shareowners sell or interested ones buy shares from those who have shares of some company

Issue Manager

The one who analyzes the company and announces IPO. Could be a team of people or Bank

NEPSE (Nepal Share Exchange Limited)

Nepal's Shares Exchange platform

Stock Broker

The one who buys or sells shares professionally(Can be regarded as an expert to some extend)

Demat Account

A special type of Bank Account through which the transactions including buying or selling shares take place

CDSC (Central Depository And Settlement)

Share Exchange Platform (Somewhat similar to NEPSE)

Mero Share

A website that lets it's users keep an eye on their IPO, Shares, and Transactions.

Few More Terminologies

DPID
DPIN
BOIN
CRN
Now we are pretty much all setup. So let's begin the actual talk,

SHARE MARKET/ STOCK MARKET

Steps

1. First of all a company that requires funding appoints an Issue Manager(Generally Merchant Banks, eg: NIC Asia Bank, Prabhu Bank, .. )

2. The Merchant Banks or the Issue Managers give information about possible Opening of IPO in near future.

3. A well-documented share plans and other legal documents are sent to SEBON(Security Board Of Nepal) for approval

4. The SEBON analyzes the documents and plans and then give a decision regarding approval on opening IPO.

5. Once SEBON approves IPO request. Issue Manager finally announces IPO(Initial Public Offering)

6. All the people interested to buy shares apply for the IPO.

7. Pre-requisites to apply for an IPO.
> A legal identity card (Citizenship)
> Two Photos
> Bank Account

8. Once the pre-requisites for IPO are fulfilled the person now needs to have a Demat Account(This is where the transactions such as buying and selling share take place)

9. How to get a Demat Account ?? Just submit the Photocopy of Citizenship, Two Photos, and the form that is given to apply for Demat to your respective bank.

Once the processing is done you'll be given your DPIN, BOIN, CRN & Login Details for "Mero Share"

10. You are now all set up to apply for the IPO. Now just find out about the IPO you wanna apply for through your mero share Panel or just get a peek on Share Sansar.

11. Minimum Capital per unit will be around Rs.100/unit (" 100 Nepali Rupees per Kitta") and you'll need to buy at least 10 units.

12. Now just apply for the amount of unit you wanna buy and there you go. You successfully bought your first Share.

What if there are tons of people applying for IPO and share is limited ??

13. Well, if there are a lot of applicants applying for IPO and share is limited then that case is regarded as having "Over Subscribers". In a situation like that, a lottery is conducted and people are offered IPO shares on a random basis.

How will we make money out of share ??

14. There are two ways you can make money in the share market. Well, not just two ways but generally speaking.

First: Through the profit that is shared between the shareholders.
Second: By selling shares

First explained - Okay so as I have mentioned a lot earlier in this blog post. Holding a share of the company means you hold some portion of a company. This means if a company makes a profit, you will be shared some amount of it.

It might be more or less depending on the net profit the company made.

Second explained - Second is Share value does rise eventually(in most of the cases). For instance, if you bought 10 units of share at a price of Rs.100/unit then you would have spent Rs.1000 on buying 10 units of share.

If the company did well and share value increased by Rs.800/unit then. Doing simple maths your share value rose from Rs.1000 to 800*10 = 8000 which is Rs.8000. This means your share is worth Rs.8000 now and that is the amount you'll be receiving on selling your 10 unit share which you bought at just 100/unit. 

SECONDARY MARKET

This is the second part of the Share Market. As the name suggests the Secondary Market. This is the part where all the selling and buying of shares take place

The Broker & NEPSE plays a major role here. This is a bit vast thing so won't be going that deep into it.
I'll just take you through the surface. If you want in-depth knowledge about the Secondary Share Market do leave a comment below. Would love to help you guys out. Anyway back to the topic.

Secondary Market will involve Brokers(Professionals who are specialized in analyzing, buying & selling shares). You just cannot buy or sell shares.
You'll first need to consult with the broker and he/she will help you out with that. And for their help, they will be charging some amount.

As far as I have known. You don't necessarily need a broker to buy and sell shares in the context of most of the countries but here in Nepal brokers and NEPSE are directly involved so lemme check whether there is a provision to buy and sell shares on your own. If yes then will be seeing you guys with an update.,

If you are still here all the way through the end. Thank you so much for sticking around. I know topics regarding finances might seem a bit boring but trust me having a stronghold on it will take you to the place where most people only dream of going.

That's the end of the blog post. Stay wealthy, Stay safe !!

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