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NEPSE-(Nepal Stock Exchange)-Market Cap meaning

Basic Meaning of NEPSE:

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 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 ExchangeAs 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 with stock market of Nepal.

Nepse -nimlm

NEPSE-NEPAL STOCK EXCHANGE

Meaning of NEPSE Index:

 

Now let’s learn about the  Nepse index.  NEPSE index denotes the increase and  decrease of whole market capitalization

 of companies’ transactions which are listed under NEPSE( Nepal Stock Exchange)NEPSE INDEX has vital  importance to  investor because this denotes the increase and  decrease of  total market. Nepse Index helps investors to make analysis and decision of buying  and  selling of (Small Fraction of Capital ) Share.

 


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NEPSE INDEX

NEPSE INDEX

 

Market Capitalization:

 

Now lets  discuss about market capitalization.There is positive or direct  relationship between market capitalization and Nepse Index.It means , When the market capitalization increases, the Nepse index also increase and when the  market capitalization declines , the Nepse index also declines.

 

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Market capitalization is the market value of a company based on the total value of all it’s 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 market price of one share * number of outstanding shares .Market capitalization is also known as  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 about how to calculate market capitalization , to calculate market capitalization  we have to multiply current market price per  share with total number of outstanding shares .

 

Let’s learn it from 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.

 

Ans;

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 SymbolName of CompanyMarket Cap (Rs. In Arba)
NTCNepal Doorsanchar Company Limited199.35
NABILNabil Bank Limited178.2
NLICNepal Life Insurance Co. Ltd.158.25
NRICNepal Reinsurance Company Limited148.7

 

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Sensitive Index in NEPSE:

The market capitalization of companies-( listed under class “A” ) determine Sensitive index .To be listed on Sensitive index ,a company must have following criteria:

Minimum paid up capital of Rs 2 crore

 more than thousand ordinary shareholders

At least three consecutive years of profitability

 book value of share higher than its par value

 

-publications of annual report with within 6 month 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


Float Index:

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.

 

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