1

CHAPTER I:
INTRODUCTION

1.1 Background
A stock market, equity market or share market is the aggregation of buyers and sellers (a
loose network of economic transactions, not a physical facility or discrete entity) of stocks
(also called shares), which represent ownership claims on businesses; these may include
securities listed on a public stock exchange as well as those only traded privately. Examples
of the latter include shares of private companies which are sold to investors through equity
crowd funding platforms. Although common, the stock market is somehow abstract for the
mechanism that enables the trading of company stocks. It is also totality of all stocks,
especially within the country.

Despite its popularity and presence in the news, the stock market is just one of many potential
places to invest your money. Investing in stock is often risky, which draws attention to the
huge gains and losses of some investors. If you manage the risks, you can take advantage of
the stock market to secure your financial position and earn money. One of the primary
benefits of investing in the stock market is the chance to grow your money. Over time, the
stock market tends to rise in value, though the prices of individual stocks rise and fall daily.
Investments in stable companies that are able to grow tend to make profits for investors.
Likewise, investing in many different stocks will help build your wealth by leveraging
growth in different sectors of the economy, resulting in a profit even if some of your
individual stocks lose value. Buying shares of stock means taking on an ownership stake in
the company you purchase stock in. This means that investing in the stock market also brings
benefits that are part of being one of a business's owners. Shareholders vote on corporate
board members and certain business decisions. They also receive annual reports to learn more
about the company. Owning stock in the company you work for can be a way to express
loyalty and tie your personal finances to the success of the business as a whole.

The stock market subjects investors to high levels of volatility. This means sometimes the
market goes up and sometimes the market goes down. Investors do not mind volatility to the
upside, but downward volatility can damage wealth. For example, when the stock market
dropped in July 2008, the market lost over half its value in less than a year, as indicated by
the S&P 500 stock index. Investors that want to invest in the market may be discouraged by
the large number of choices. The Wilshire 5000 stock market index covers the entire U.S.
stock market and includes over 6,000 stocks. There are over 4,000 stock mutual funds. It can
take a lot of time, education and effort to research the market and select an appropriate stock
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portfolio. The size and complexity of the stock market makes it difficult for an individual
investor to successfully meet investment goals.

The history of stock market is not long in Nepal. Securities Exchange Centre (SEC) was
established in 1976 with an objective of facilitating and promoting the growth of capital
market. However, it opened its floor for secondary trading of shares only in 1981, which was
only for government bonds (NRB, 1996). With enactment of Securities Exchange Act 1984,
SEC opened its floor for corporate share trading also, but it was very limited. The organized
and full fledge stock market began with the conversion of Securities Exchange Centre into
Nepal Stock Exchange (NEPSE) Limited in 1993. The NEPSE opened its trading floor in the
beginning of 1994. Till now, it is the only stock exchange in Nepal. Hence, the stock market
in Nepal is still in evolving stage but of special interest as it has grown significantly since its
establishment. It was established in order to mobilize capital alternative to traditional banking
sector for promoting economic growth and development in the country.

Within a short period of time since its inception, the NEPSE index witnessed significant ups
and downs. Recently, after the results of the second CA election in November 2014, the
NEPSE index took an upward trend until August 2014. On July 14, 2014 the benchmark
index reached 1036.1, the highest in the last six years. Earlier on August 31, 2008, the
NEPSE index had reached its all-time high of 1175 points before plunging to a record low of
292 on June 15, 2011. Although the scope of share market is gradually increasing, people are
still unaware about its importance on enhancing the economy of the country. Hence to know
about the knowledge of people on share market, I had conducted the research so that it will
help for related institutions to make necessary programs to make the people aware about the
Nepalese share market.

1.2 Objectives of the Study

The general objective of this study is to understand the people’s knowledge on share market.
The specific objectives of the research are

 To identify the probable opportunities in share market,

 To understand the present difficulties in share market and
 To identify proper management strategies.

1.3 Significance of the Study

Share market is one of the emerging area in Nepal. The Nepalese stock market is still in
infant stage. Therefore it is essential to know the knowledge of people on share market to
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create necessary awareness programs so that there would have cent percent financial literacy
in the research area.

This study is conducted to find out the knowledge of people on share market as well as to
find the proper share market management strategy. There has been extensive research on the
share market nation wise and worldwide. But the case of “knowledge of people on share
market at putalisadak” is new area of research. The main aim of this study is to conduct a
sample survey for collecting the data from general people at putalisadak area and to know
their personal views on share market. Once the study will be completed, it would be highly
useful to the related institutions and individuals.

1.4 Literature Review

There are various masters’ thesis prepared by various researchers in the past year.
Among them, some of these are reviewed here for analysis of literatures.

Bhattarai (1990) has carried out on “Share Market in Nepal”. In which, he emphasized the
historical background and the analysis of various financial variables affecting the smooth
operation of share market. This study was mainly based on secondary data obtained from
various sources. He has applied both financial and statistical tools in the study. He found that
out of 12 sample companies, 2 companies were useful to cross over the average price-
earnings ratio, as a result, market price of shares were highly skewed. Moreover, there was
mismatch between calculated and quoted price. However, he concluded that the involvement
of more and more institutions as well as individual investors in capital market through
broker’s network raised the transaction volume. Rumors spread by brokers and create
genuine
speculation. Fair plays of bulls and bears make market equilibrium resulting price
stabilization speculation on the trading of shares is encouraged. Thus, the market starts to
walk randomly reflecting true value of shares. Investors are facilitated by providing
alternatives to make diversified portfolio.

Bhatta (1996) in his thesis paper “Assessment of the performance of listed companies in
Nepal” concludes that a highly significant positive correlation ship has been addresses
between risk and return chapter of the company. Investors expect higher return form that
stock, which associates higher risk. Nepalese capital market is not efficient one. So the stock
price does not contain all the information relating to market and company itself. Neither
investors analyze the overall relevant information of the stocks nor does the member of stock
exchange try to disseminate the information. So the market return and risk both may not
show high priced stocks. In the addition, Bhatta further addressed that Investors of Nepal
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have not yet practiced to invest in portfolio of securities. An analysis of the two securities
portfolio shows that the risk can be totally minimizes if the correlation is perfectly negative.
In this situation, the risk can totally be diversified, but when there is perfectly positive
correlation ship between the return of the two securities the risk is not diversified.

Khatiwada (1996) in his thesis paper “A study on securities Investment in Nepal” concludes
that; leaving some exceptional cases aside, almost all the companies experienced their market
price going down by less than fifty percent in 1995. Even the banking group could not spare
the share price going down more specifically, the year 1995, was a disheartening period for
the stock price. It is because, almost all the company’s share price during the year were down
even in some cases below the face value. Through the study conducted by Katiwada did not
focus the analysis of individual security and the viewpoint of investors, it explores some
dimension to further research in this aspect.

Bhatta’s (1997) study on “Dynamic of Stock Market in Nepal” revealed that resource
mobilization has a vital role in the developing economy like Nepal. The development of
Stock Market in Nepal is a must for the resource mobilization. There are various problems of
Nepalese Stock market, which have checked the resource mobilization in the economy. In his
research work, he set the objectives like analyinge the trend of Nepalese stock market,
diagnosing and comparing the sect oral financial status of the stock in Nepalese stock market,
analyzing the market shrew prices of the Nepalese stock market and finding out the impact of
the secondary or primary market and vice versa. The research result recommends that the
government should make not only policies for the capital market development but also
implement these policies appropriately, investment in corporate sector should be encouraged
and their share should be listed in the stock exchange, the regulatory authorities of the stock
market should create environments to rise the trading of share in the stock exchange, and the
government should make appropriate policies and programs for the enhancement of the
entrepreneurship development in the Nepalese economy. In conclusion, he tried to show that
although it has become late to take steps to overcome such problems of the Nepalese stock
market in order to make it active and supportive; the stock market has a good prospect for the
resource mobilization to finance the productive enterprises in the Nepalese economy.

Pant (2000) has analyzed in her thesis “Current Status and Problems of Stock Market in
Nepal” with an objective to analysis the problems and trends of present state of Nepal Stock
Market and suggest measures for the improvement of stock market. The researcher mostly
used secondary data collected from books; company Act, Official records of the NEPSE,
Securities listings By-laws, Act, Government publication etc. She found in her study that the
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development of stock market primarily depends on the government policies and program and
their proper implementation. So, government should develop an appropriate policy
framework to increase the demand for supply of securities. She also found that there is a lack
of investor’s confidence in the stock market since many listed companies do not trade on a
regular basis or hold AGM and provide disclosure information to the investors on a timely
basis. Beside this, there is a general lack of investor’s awareness about the listed companies.

Adhikari et al. (2000) in their research work, “Investment Management in Stock Market”
concludes that individual Nepalese savers have extremely limited opportunities for investing
their long- term savings. To secure maximum returns, these investors should have
opportunity to invest into long-term corporate equities rather than state of the stock market.
Both and institution are putting for more of their savings into bank deposits and fixed
interest, government securities than they would if the market were working properly. Thus,
long-term saving that should be invested in the stock market is going into short term
investment.

Khanal (2003) has prepared the thesis on “Growth, Problems and Prospects of Nepalese
Stock Market”. The main objective of the study were to examine the investors’ awareness, to
examine the stock broker’s and other related institution performance, to analyze sector wise
financial performance of NEPSE, and to observe the coordination among SEBON, NEPSE
and Rastra Bank. In this study, Khanal concluded that the development of stock market in
Nepal so far cannot be considered satisfactory. This is evident from the facts and figures
available in the stock market performance. But there is enough long term liquidity in the
market. Again he added that the stock market and economic activity move in similar
direction. They influence each other. Nepal Stock Exchange is the only one institution in the
country to regulate and control the financial system of a country. The official stock market in
Nepal, NEPSE is ten years old. It means it is in infant stage thus equity market and related
institutions are still in their infancy stage.

Shrestha (2005) has carried out a study on “Growth of Stock Market in Nepal” with the
objectives to trace out the current situation of primary market from the year 1994/95 to
2004/05. The researcher used standard deviation, percentage, multiple bar diagram to trace
out the picture of stock market in Nepal. Her study was based on secondary data with the
large samples of listed companies from different sectors. The researcher applied historical
data and statistical tools in her study. Thus, she concluded that there is significant
development in various stock market indicators in stock market. The laws and policies
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regarding market are not very clear. There is not enough foreign investment in the stock
market.

G.C. (2006) in his journal “Stock market and economic development: a causality test”
describes about an attempt that has been made in this paper to examine the existence of
causality relationship between stock market and economic growth based on the time series
data for the year 1988 to 2005 using Granger causality test. The study finds the empirical
evidence of long-run integration and causality of macroeconomic variables and stock market
indicators even in a small capital market of Nepal. The causality has been observed only in
real terms but not in nominal variables. In econometric sense, it depicts that the stock market
plays significant role in determining economic growth and vice versa. Interestingly, the
causation is evident with a lag of 3 to 4 years. Also, the paper reveals the importance of stock
market development for fostering economic development.

Tetlock (2007) quantitatively measured the interactions between the media and the stock
market using daily content from a popular Wall Street Journal column. He found that high
media pessimism predicts downward pressure on market prices followed by a reversion to
fundamentals, and unusually high or low pessimism predicts high market trading volume.
These and similar results were consistent with theoretical models of noise and liquidity
traders, and were inconsistent with theories of media content as a proxy for new information
about fundamental asset values, as a proxy for market volatility, or as a sideshow with no
relationship to asset markets.

Shahbaz et al. (2008) argues that contemporary economies of developing countries are
changing due to rapid changes in the world economy. The emergence of international
financial industry for worldwide network of transactions altered the role of international
economy. Increased financial flows have altered the role of private capital and subsequently
effect resource allocation. The economies of developing countries are witnessing changes in
the composition of capital flows because world equity market is expanding rapidly. Foreign
direct investment (FDIs) and stock market boom are the indicators of the changing world
economic order. Earlier, most of the developing nations were facing serious liquidity
problems thus compromising economic growth. Now, it is important to study how the
changes in financial sector contributed in the overall growth of the economy. The paper
endeavors to investigate whether there is a relationship between stock market development
and economic growth in case of developing economy such as Pakistan. The data set covers
annual times series data from 1971 to 2006. They employed two new tests that is DF-GLS,
and Ng-Perron to find integrating order of the said variables of the study. To test long-run
robustness, J-J Co-integration and ARDL bounds testing techniques were applied. To
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investigate long-run causal linkages and short-run dynamics, Engle-Granger causality and
ARDL tests were applied respectively. After finding order of integration, their findings
suggested that there exist a very strong relationship between stock market development and
economic growth. Engle- Granger-Causality estimation confirmed in the long-run, there is bi-
directional causality between stock market development and economic growth. However, for
short-run, there exist only one-way causality that was from stock market development to
economic growth.

Nazir et al. (2010) in his journal “Relationship between economic growth and stock market
development” states that the capital market plays an essential role in the growth of commerce
and industry which ultimately affects the economy of the country to a large extent. This is the
rationale that the industrial bodies, government advisors and even the central bank of the
country keep a close eye on the activities of the stock market. The paper exploreed the
relationship between the stock market development and economic growth in Pakistan for the
period of 1986 to 2008. They investigated the stock market development and economic
growth relationship by using the two major measures of stock market development, namely:
size of the market and liquidity prevalent in the market in terms of market capitalization. The
results revealed that economic growth can be attained by increasing the size of the stock
markets of a country as well as the market capitalization in an emerging market like Pakistan.

Lamichhane (2017) in his report “The Journal of Nepalese Business Studies” states that
securities market turnover is one of the major behavioral phenomena of stock market. It
always depends on the demand and supply of the securities, so the market turnover assumes a
number of trading share units, values of share turnover and percentage share value of stocks.
The report is concerned to analyze the different areas of stock units’ turnover and value
coverage of stock market .descriptive research design is applied for analyzing the stock
market condition. The coverage of share units and share of value weight is analyzed of Nepal
stock exchange market economy.

1.5 Research Methodology

Research methodology refers to the methods and techniques used in the planning of research
design, collection of data, tabulation and analysis of the collected data to provide valuable
information to achieve the objective of the study. Following are the parts of research
methodology:

1.6 Research Design

Research design is the process of developing overall framework for conducting the overall
research. It helps to provide a guideline about how to conduct the overall research and helps
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to check the development of the work done. It also define what sample to be used, which
method to be used for data collection and analysis of the data. Most of the questions will be
asked through questionnaire method and personal interview. I prepare a structured
questionnaire with both opened and closed ended questions to obtain the information on
stated objectives. The questionnaire is divided into four part: Personal Information, Probable
Opportunities in Share Market, Difficulties in share market and Proper Management
Strategies

1.7 The Area of the Study

The area of my research is Putalisadak, Kathmandu, Nepal. The area is selected in order to
find the knowledge of people on share market. The report also provides people’s perception
on share market. The study area is presented in the following figure.

Figure 1: Map of the Study Area

1.8 The Population and Sample

The population of this study is the residents of putslisadak area. The project work needed the
total of 50 respondent as a sample. Purposive sampling method was used in order to collect
information. The target sample was 50 respondents who had at least once involved in share
market.
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1.9 Sources of Data

Within the study area, the study is based on primary data. I use primary data since my study
is related with the knowledge of people on share market at Putalisadak, which is not available
form secondary data. In primary data questionnaire method and personal interview were used
to obtain the information.

1.10 Method of Data Analysis

The surveyed data initially inputted into MS-Excel and then we analyzed it by using various
statistical techniques. We did necessary coding, recording and calculation of variables in
Excel before analyzing the data. The analytical methods were based on mean, median, pie
chart, bar diagram and descriptive statistics.

1.11 Actual Survey

The Survey was conducted from July 29 to August 5, 2018. The respondents of the research
were very friendly and enthusiastic to give answer to the questions. Some of the respondents
hesitated to take survey but later they were also eager to answer the questionnaire.
Respondents were very supportive to this kind of research project work.
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CHAPTER II:
DESCRIPTIVE ANALYSIS

This chapter resents the descriptive analysis of the study. This chapter composed of the
descriptive results of the variable, which are presented in five main sections. The first section
deals with the demographic and socio-economic characteristics of the respondents, second
section deals with the probable opportunities in share market, third section deals with the
difficulties in the share market, forth section deals with the management strategies and fifth
section deals with the major findings and discussions of the study.

2.1 Socio-Economic Characteristics of the Respondent

Gender

Results of the study shows that among the 50 respondents, male are 41 which is 82% of the
total respondents and female are 9 which is 18% of total respondents. It shows that more
number of male are involved in share market than female. It is represented in the following
pie chart.

18%

male
female

82%

Figure 2: Gender of the Respondents

Age-Group

The respondents comprises of different range of age group people. The highest number of
respondents within an age range lies in 20-29 age group that is 18 out of 50 respondents.
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Similarly, the age group with low respondents are below 20 and 60-69 age group both having
only one respondent each. It explains that the people within age group 20-29 are involved
more in share market. It is represented in the following bar diagram.

18
18

16

Number of 14 13
Respondents 12 11

10

8
6
6

2 1 1

0
below 20 20-29 30-39 40-49 50-59 60-63

Figure 3: Age of the Respondents

Education Level

Out of total respondents, 24 respondents had bachelor degree education level which is the
highest number of respondents in terms of education level. All of the respondents were
educated to a certain level. The results state that people having bachelor degrees are more
involved in the share market. It is represented in the following bar diagram.
 24
25

Number of 20
respondent

15
12

9
10

4
5
1
0
0
primary lower secondary higher bachelor master
secondary secondary

Figure 4: Education Level

Marital Status

More than half of the respondents are married, which is 30 out of the total respondents.
Similarly, remaining respondents that is 20 is unmarried. None of the respondent we either
divorced or widow. It is represented in the pie-chart below.

40% married

60% unnmarried

Figure 5: Marital Status

Family Composition

Among the respondents, 30 respondents have family members of 4-6, 1-3 family members
range and 7-9 family members range have total respondents of 8 and 9 respectively. 13-15
family member composition have the least respondent. It is represented in the bar diagram
below.

30
Number of
Respondents 25

20

15 30

10

5 8 9
2
1
0
1 to 3 4 to 6 7 to 9 10 to 12 13 to 15

Figure 6: Family Composition

2.2 Probable Opportunities in Share Market

Level of Understandability of Share Market

According to the research, about 64% of the respondents have only moderate
understandability of share market. None of the respondents had very high knowledge on
share market and the respondents having high and low understandability of share market
were relatively similar. It shows that people on the study area are moderately aware about the
share market. It is shown in the following bar diagram.
 35

Number of 30
Respondents
25

20
32
15

10

5 10
6
2
0 0
very low low moderate high very high
Figure 7: Level of Understandability of Share Market

Directly Involvement in Share Market

Among the 50 respondents, 40 of them have directly involvement in the share market,
occupying 80% of the total, whereas 10 of them have not directly involved in share market,
which makes 20% of the total respondents. It projects that more number of people have been
involved in share market. It is presented as below.

no
20%

yes

yes no

80%

Figure 8: Direct Involvement in Share Market

Reason for Involvement in Share Market

Out of the total respondents, 15 of them had involved in share market to make money, 8 of
them had involved to enhance their financial knowledge, 6 believed that share market is the
potential area for investment and 10 had chosen all of the given reasons. It explains that most
of the people involve in share market to earn money. It is represented in the column chart as
below.
 15
16

Number of 14
Respondents
12 10
10 8
8 6
6
4
1
2
0
To make money To enhance Potential area All of the above Others
financial for investment
knowledge

Figure 9: Reason for Involvement in Share Market

Motive to Buy Securities (Share)

There are only two reasons for investor to buy share. It could be either for long term or for
short term. Out of 50 respondents, 14 respondents preferred to buy securities (share) for short
term, which comprises 28% of total, and 36 respondents preferred to buy securities for long
term, which comprises 72% of total respondents. The results reveals that people prefer to buy
securities for long term. It is represented in the following pie-chart.
28%

short term

long term
72%

Figure 10: Motive to Buy Securities

Preference of Securities (Share)

According to the research, 27 out of 50 respondents preferred to buy government securities
whereas remaining 23 preferred to buy private securities. This result shows that investors
generally buy government securities. It is represented in the column chart below.

28

27
Number of
26
respondents
25

24

23

22

21
government security private security

Figure 11: Preference of Securities

Opportunities Created by Share Market
Here, research is done to know the opportunities created by share market for the investors.
According to the research, a little more than half of the respondents that is 26 respondents
believed that Nepalese share market had created only satisfactory opportunities for them.
Similarly, 18 respondents believed that Nepalese share market had created very good
opportunities for them as an investor. Only 4 respondents believed that share market had
created excellent opportunities for investor like them. Approximately half of the investor
feels satisfactory with the opportunities created by Nepalese share market to them. It is
presented in the following column diagram.

30

Number of 25
respondents
20

15
26

10 18

5
2 4
0
0
very poor poor satisfactory very good excellent

Figure 12: Opportunities Created by Share Market

Probable Area to Apply

There are various sector in the Nepalese share market where the investor can apply the share
for. The respondents of my research had also different area of interest to apply for share.
Among the 50 respondents, 18 respondents mostly apply for microfinance, 14 respondents
mostly apply for hydropower, 9 respondents mostly apply for banks, 5 mostly apply for
development banks and remaining had chosen others which includes insurance company,
hotels etc. The result describes that most of the respondents preferred to invest in
microfinance and hydropower. It is represented in the following pie-chart.
Others
8% Banks
18%

Hydropower Development
28% Banks
10%

Microfinance
36%

Figure 13: Probable Area to Apply for Share

2.3 Difficulties in Share Market

Level of Difficulty
More than half of the respondents that is 29 respondents have faced moderate level of
difficulty in share market. 10 respondents have faced little level of difficulty, 6 have faced
big level of difficulty and one had faced very big level of difficulty in the share market. It
explains that the most of the investor face moderate level of difficulty in the share market. It
is represented in the bar diagram below.

30

Number of 25
Respondents
20

15 29

10

5 10
6
4
1
0
 very little

Figure 14: Level of Difficulty

Affect due to Change in Share Price
In the share market, investor are either affected or not affected by the change in price of the
stock. In my research, out of total respondents, 35 respondents which is 70% of total are
affected due to change in share price whereas 15 respondents which is 30% are not affected
by the change in share price. In general, the investor in share market are affected with the
fluctuation in share price. It is shown in the pie-chart as below.

30%
yes

no
70%

Figure 15: Affect due to Change in Share Price

Challenges in Share Market

Nepalese share market is still in its infancy. There are various challenges in the pace of
growth of this sector. In my research, out of 50 respondents, 13 respondents believed that the
main challenge in share market is due to the ineffective government policy. Similarly, 11
respondents think that lack of knowledge of people on share market is the main challenge in
share market. Instable political situation as the main challenge in share market is believed by
9 respondents. Remaining 14 and 3 respondents have chosen all of the above mentioned
challenges and other reasons respectively as the challenges in Nepalese share market. This
result shows that Nepalese share market is challenged with ineffective government policy,
lack of knowledge of share market and instable political situation. The detail of the topic is
mentioned in the following column diagram.
 14
Number of 12
respondents
10

8
13 14
6 11
9
4

2 3
0
Ineffective Lack of Isntable All of the Others
government knowledge of political above
policy people situation

Figure 16: Challenges in the Share Market

Challenge due to Only One Stock Exchange

Different countries in the world like United States, India, etc. have more than one stock
exchange. In Nepal, there is only one stock exchange which is Nepal Stock Exchange
(NEPSE). There are its own pros and cons of having only one stock exchange. In my
research, respondents had different sense on having only one stock exchange. Among the 50
respondents, 33 respondents believed that having only one stock exchange in the country
might be causing challenges in the share market. In contrast, 17 respondents believed that
having one stock exchange do not cause any challenge in the share market. This result reveals
that investors believes that having one stock exchange do cause challenges in share market. It
is represented in the following pie-chart.
34%

yes
66%
no

Figure 17: Challenges due to Only One Stock Exchange

2.4 Management Strategies

Current Situation of Share Market
I had conducted the research during the end of July till the mid of August. During that period
Nepalese share market was in bearish trend. Among the total respondents, 21 respondents in
each had felt the current situation of share market is in worse and moderate situation.
Similarly, 4 respondents in each had felt the share market is in extremely worse and good
situation. None of the respondents felt the share market at the best situation. It is represented
in the column chart below.

25

Number of
respondents 20

15

21 21
10

5
4 4
0 0
extremely worse moderate good best
worse

Figure 18: Current Situation of Share Market

2.5 Major Findings and Discussions
The main objective of the research is to understand the people’s knowledge on share market
at Putalisadak. The research has fully satisfied the objective of the research.

 82% of the respondents are male.

 The research comprises of the respondents with various age group starting from 17
years to 62 years.
 48%of the respondents had bachelor degree and all respondents had formal education
to some level.
 About 60% of the respondents were married. Similarly, 60% of the respondents had
family size of 4-6 members.
 As per the research, 64% of the respondents had moderate level of understandability
of share market.
 From the analysis, 80% respondents directly involved in share market,
 Out of total, 58% respondents wanted to have international share trading
opportunities.
 From the research, it is clearly known that 72% of the respondents preferred to buy
securities for long term.
 Much of the respondents apply for share either moderately or often.
 Similarly, more number of respondents either had difficulty while trading or
informative barriers.
 32% of the respondents had emotional effects when they cannot trade their share in
their desired time.
 Out of the total respondents, 78% of the respondents felt that there is the great
complexities in the Nepalese share market.
 The research reveals that approximately 65% of the respondents believed that the
main challenge in share market is due to the ineffective government policy, due to
lack of knowledge of people on share market and instable political situation.
 Out of the total respondents, 66% respondents believed that having only one stock
exchange in the country might be causing challenges in the share market.
 Among the total respondents, more than 80% of the respondents felt the current
situation of share market is in worse and moderate situation. None of the respondents
felt the share market at the best situation.
 The research conducted reveals that the much of the investor are not satisfied with
the trend of Nepalese share market whereas few believe that the Nepalese share
market is at its good position.
 The investor in the share market believe that due to lack of government strong
policies and support, the share market is going to its worse condition.
 Similarly, some of the respondents also believe that due to unbalance in demand and
supply of share, lack of systematic trading environment and unstable government
situation the Nepalese share market is at the worse situation.
 Further, respondents also believe that due to the less number of investor in the
market, the Nepalese share market has not improved.
 As per the research, from the total respondents, 82% of the respondents are hopeful
that the Nepalese share market could be improved.
 Research’s result shows that mainly government should be responsible to improve
the Nepalese share market.
 Secondly, investor should also be responsible as they should not be manipulated by
big investors.
 Lastly, research also suggest share market bodies like NEPSE, SEBON, brokers etc.
should also be responsible to improve the downward trend of share market.
 Government should make effective market policies to make the market stable.
 Secondly, various stock exchange reforms programs should be established and
proper knowledge on share market should be provided to the laymen investor so that
they could get enough foundation on the share market.
 Such programs should be conducted by regulating bodies, NEPSE, brokerage firm
etc. time and again.
 Similarly, to improve the downward trend of Nepalese share market, new and
improved technologies should also be started to make the market more systematic.
Investor should be provided with favorable investment situation and online system
should be introduced.
 CHAPTER III:
SUMMARY AND CONCLUSION
In the previous chapters, researchers explained the introduction, review of literature research
methodology and presentation and analysis of data. This chapter presents the summary,
conclusions and recommendations from the analysis of primary and secondary data regarding
the knowledge of people on share market.

3.1 Summary of the Findings

Stock market in recent years has become an integral part of economic development. It can
play a vital role in encouraging and channeling the saving to provide the entrepreneurs for
investment in profitable projects in the economy. Stock market serves as a direct link
between the suppliers and the users of capital fund. Thus, stock market has both theoretical
and practical perspectives. This research mainly aims to know the knowledge of people on
share market. The specific objectives of the study are to identify the probable opportunities in
share market, to understand the present difficulties in share market and to identify proper
management strategies.

This research is based on both primary data analysis. For the collection of data, purposive
sampling of 50 respondents has been taken. Respondents were interviewed and asked
questions through questionnaire method. I prepare a structured questionnaire with both
opened and closed ended questions to obtain the information on stated objectives.

As per the research, 64% of the respondents had moderate level of understandability of share
market, From the analysis, 80% respondents were directly involved in share market to earn
money, to enhance their financial knowledge and they believed that share market is the
potential area for investment. Remaining 20% of respondents did not directly involved in
share market because they lack of interest on share market, they had no knowledge on this
area and they do not find share market as a potential area for investment. Out of total, 58%
respondents wanted to have international share trading opportunities. Likewise, 72% of the
respondents preferred to buy long term securities either for high return, yearly return or to
have less stress. In contrast, 28%, who preferred to buy short term securities, were motivated
to this due to limited cash availability, to gain return fast on share trading and to maintain
flexibility while trading.

Moving on with the difficulty of people on share market, out of total, 10% respondents had
faced difficulty while applying for share in the primary market. Similarly, 34% respondents
had faced difficulty in trading share, 36% respondents had faced informative barriers related
to share market and 20% respondents had faced other kind of difficulty in the Nepalese share
market. Out of the total respondents, 78% of the respondents felt that there is the great
complexities in the Nepalese share market. In my research, from the total respondents, 26%
respondents believed that the main challenge in share market is due to the ineffective
government policy, 22% respondents think that lack of knowledge of people on share market
is the main challenge in share market. Instable political situation as the main challenge in
share market is believed by 18% respondents. Out of the total respondents, 66% respondents
believed that having only one stock exchange in the country might be causing challenges in
the share market.

Among the total respondents, more than 80% of the respondents had felt the current situation
of share market is in worse and moderate situation. None of the respondents felt the share
market at the best situation. The research conducted reveals that the much of the investor are
not satisfied with the trend of Nepalese share market. The investor in the share market believe
that due to lack of government strong policies and support, the share market is going to its
worse condition. Similarly, some of the respondents also believe that due to unbalance in
demand and supply of share, lack of systematic trading environment and unstable
government situation the Nepalese share market is at the worse situation. As per the research,
from the total respondents, 82% of the respondents are hopeful that the Nepalese share
market could be improved. Research’s result shows that mainly government should be
responsible to improve the Nepalese share market. Secondly, investor should also be
responsible as they should not be manipulated by big investors. Lastly, research also suggest
that the bodies like NEPSE, SEBON, brokerage firms etc. should also be responsible to
improve the downward trend of share market.

Though the Nepalese share market is at bearish trend, various steps and programs could be
used to improve this trend. First of all, government should make effective market policies to
make the market stable. Secondly, various stock exchange reforms programs should be
established and proper knowledge on share market should be provided to the laymen investor
so that they could get enough foundation on the share market. Similarly, new and improved
technologies should be implemented to make the market more systematic. Investor should be
provided with favorable investment situation and online system should be introduced. With
all these new procedures, people believe that the Nepalese share market is a good area for
investment as well as can enhance the economic growth of the country.

3.2 Conclusion
From the analysis, it is concluded that the share market is still in its infancy and people are
still not aware about this area. Form those, who are involved in share market, they are either
involved to earn money, to enhance financial knowledge or they believe that share market is
the potential area for investment. Similarly, most of the investor are motivated to buy long
term securities and preferred mostly government securities. Analyzing the research, investor
are only satisfactory with the present condition of the Nepalese share market.

Moving on to the difficulty of Nepalese share market, investor face moderate level of
difficulty in either while applying share, or trading share or due to informative barriers.
Generally, investors are affected when the share price changes and much of the investor find
complexities in the Nepalese share market. The research shows various challenges in the
share market. The major challenges in the share market as per the research are ineffective
government policy, lack of knowledge of people, instable government situation etc. Research
also reveals that due to only one stock exchange Nepalese share market is facing challenges.

According to the research, about 42% of the respondents felt current situation of the share
market to be worse. Likewise, 42% of the respondents also felt share market as in moderate
situation. In order to improve the current situation of share market, respondents of the
research believed that first of all, government should be responsible. Effective market
policies, stock exchange reform programs, systematic market situations etc. should be done
by government to improve the current situation of Nepalese share market. Secondly,
Investors should also be responsible to improve the current situation of share market. They
should invest slowly with full rationale without being manipulated. Similarly, frequent
awareness programs should be conducted by different related bodies like NEPSE, SEBON,
brokerage firms to improve and enhance the Nepalese share market.

3.3 Research Gap

The research is limited to Putalisadak area only. According to my view, if the research can
capture large area then it can help other researcher to analyze the management strategies to
aware the people about the share market as it is one of the main area for economic
development. The respondents which I took are limited and do not include overall population.

BIBLIOGRAPHY
Adhikari J., Joshi P.L., and Gaire A. (2000). Investment Management in Stock Market. A
Journal of Management and Development Review.

Bhatta, B.P. (1997). Dynamics of Stock Market in Nepal. An Unpublished Master’s Degree
Thesis, submitted to Faculty of Management, T.U.

Bhatta, G.P. (1996). Assessment of the Performance of Listed Companies in Nepal.

An Unpublished Master’s Degree Thesis, submitted to Faculty of Management, T.U.

Bhattarai, A.R. (1990). Share Market in Nepal. An Unpublished Master’s Degree Thesis,
submitted to Faculty of Management, T.U.

GC, S. B. (2006). Stock market and economic development: causality test. Online available at
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1566002.

K.C. F.B, and Joshi N. K. (2013). The Nepalese Stock Market: Efficient and calendar
Anomalies. Kathmandu: Asmita Publication.

Khanal R. (2003). Growth, Problems and Prospects of Nepalese Stock Market.

Kathmandu: Khanal Publication.

Khatiwada, Mohan (1996). A study on Securities Investment in Nepal. An Unpublished

Master’s Degree Thesis, submitted to Faculty of Management, T.U.

Lamichhane, B. (2017) Market Turnover of Nepalese Stock Market. Journal of Nepalese

Business Studies, 10(1), 96-100.

Nazir, M. S., Nawaz, M. M., & Gilani, U. J. (2010). Relationship between economic growth
and stock market development. African Journal of Business Management, 4(16), 3473-3479.

Pant, R. (2000). Current Status and Problems of Stock Market in Nepal. An Unpublished
Master’s Degree Thesis, submitted to Faculty of Management, T.U.

Shahbaz, M., Ahmed, N., & Ali, L. (2008). Stock market development and economic growth:
ARDL causality in Pakistan. International Research Journal of Finance and Economics,
14(1), 182-195.

Tetlock, P. C. (2007). Giving content to investor sentiment: The role of media in the stock
market. The Journal of finance, 62(3), 1139-1168.
Wang, Y., & Di Iorio, A. (2007). The cross-sectional relationship between stock returns and
domestic and global factors in the Chinese A-share market. Review of Quantitative Finance
and Accounting, 29(2), 181-203.
 APPENDIX-I

Survey Questionnaire

Hello Sir / Ma’am,

My name is Shisir Shrestha. I am undergraduate student of Central College of Business

Management, Pokhara University, Nepal. At the present time, I am doing research project
work under the title “KNOWLEDGE OF PEOPLE IN SHARE
MARKET AT PUTALISADAK”. The main objective of the study is to know the
knowledge of people in share market at putalisadak. In order to meet the objective, 50
Respondents have been selected and you are one of them. Your participation is completely
voluntary. This information is being collected for academic purposes only and any details
related to your privacy will be kept confidential. The interview will take approximately 10-15
minutes, but with your cooperation it can be done quicker.

May I have permission to undertake this interview?

Yes = Proceed with interview.

No = Thank the person and look for the next respondent.

General Information

Name of Respondent: ……………………………………………………………...

Date: .................... Start Time: ……………….. Stop Time: ……………….

Ward: …………… Mobile No: ………………..

 Part A: Personal Information

S. Questions Answer
No.
1 Gender of the respondent. 1 = Male
2 = Female
2 How old are you? years
3 Do you have formal education? 1 = Yes
(If no, go to question number 5) 2 = No
4 What is your highest education level? 1= Primary (1-5)
2= Lower Secondary
(6-8)
3= Secondary (9 and
10)
4= Higher Secondary
(11 and 12)
5= Bachelor Level
6= Master Level
5 Do you have any vocational training? 1 = Yes
(If no, go to question number 7) 2 = No
6 Have long have you been involved in this training? Months Years
7 Are you native to this place? 1 = Yes
(If yes, go to question number 9) 2 = No
8 How long you have living in the community? Years
9 What is your marital status? 1= Married
(If never married, go to question number 12) 2= Never Married
/ Unmarried
3= Divorce
4= Widow
5= Others
10 How many members are there in the family?
11 How many children do you have?
Part B: Probable Opportunities in Share Market.

S Questions Answer
No.
12 To what level you understand share 1= Very High
market? 2= High
3= Moderate
4= Low
5= Very Low
13 Do you have taken training related with 1= Yes
share market? 2= No
14 Have you involved directly in share 1= Yes
market? 2= No
(If no, go to question number 16)
15 Why you get involved in share market? 1= To make money
(Multiple choices) 2= To enhance financial
knowledge
3= Potential area for investment
4= All of above
5= Others
16 Why you do not get involved in share 1= Lack of interest
market? 2= No knowledge
(Multiple choices) 3= No potential area for
investment
4= All of above
5= Others
17 Do you want international share trading 1= Yes
opportunities in Nepalese share market? 2= No
18 For what motive do you buy securities 1= Short Term ( Less than 2
(share)? year)
2= Long Term (More than 2
year)
19 If short term, why you are motivated to 1= Due to Liquidity Facility
this? 2= Limited Cash Availability
3=Maintain Flexibility while
trading
4= To gain return fast
5= All of the above
6= Others
20 If long term, why are you motivated to 1= High Return
this? 2= Yearly Return
3= Less Stress
4= Decrease overall risk
5= All of the above
6= Others
21 Do you prefer government securities over 1= Yes
private companies’ securities? 2= No
22 How often do you apply for share? 1= Very Often
2= Often
3= Moderately
4= Little
5= Very Little
23 In your opinion, to what level share market 1= Excellent
would create opportunities for you as an 2= Very Good
investor? 3= Satisfactory
4= Poor
5= Very poor
24 In what area you find probable 1= Banks
opportunities to apply for? 2= Development Banks
3= Microfinance
4= Hydropower
5= Others( Specify)
Part C: Difficulties in Share Market.

S.No. Questions Answer

25 What difficulties do you face in share 1= While applying share
market? 2= In Buying / Selling share
3= Informative Barriers
4= Others (Specify)
26 To what level you face difficulty? 1= Very Big
2= Big
3= Moderate
4= Little
5= Very little
27 Can you trade your share in your desired 1= Yes
time? 2= No
28 What affects it normally create when you 1= Emotional Effect
cannot trade your share in your desired 2= Causes Irritating Behavior
time? 3= Makes you angry
4= Negative Motivation
5= Others
29 Does it affect to you when the share price 1= Yes
goes up and down? 2= No
30 To what extent does it affect you? 1= Very Heavily
2= Heavily
3= Moderately
4= Little
5= Very Little
31 Do you find complexities in share 1= Yes
market? 2= No
32 What do you think of the main challenges 1= Ineffective Government
in share market? Policy
2= Lack of Knowledge of people
3= Instable Political Situation
 4= All of the above
5= Others
33 Do you think having only one stock 1= Yes
exchange might be causing challenges in 2= No
this sector?

Part D: Proper Management Strategies

S Questions Answer
No.
34 What you think of the current situation of 1= Extremely worse
share market? 2= Worse
3= Moderate
4= Good
5= Best
35 If it is worse, why it is so?

36 If it is good, how you see it?

37 Do you think that the current situation 1= Yes

could be improved? 2= No
38 What should be done to make the share
market work smoothly?

39 Who should be responsible to make it

better?