Dear readers, everyone is into the share market these days IPO, Demat Account, Rise and fall of shares. We hear these terms a lot these days. You can also read get fully detailed information about the Share Market in Nepal in our series of articles about the share market. In this article, you will get to know when to buy and sell shares in Nepal so that you can get a high return of investment from your hard-earned money.
In the first place, the share market is full of risks and opportunities. There are many examples of people getting huge profits from the shares market. On the other hand, there are equally unfavorable risks that can cause great loss as well.
In like manner, there are different factors that can affect your earnings from the share market. For instance, market value, national economy, political conditions, etc. also affect the share market. Click here to know more about the Factors that affect the Nepalese share market.
Before knowing about When to Invest, we have to know about Where to Invest.
Now, lets know more about Where to Invest in the Share Market.
Firstly, deciding which company is profitable and is suitable to invest requires better analysis, knowledge and research of the market. Equally important thing is to decide whether you are an investor or trader. If you are investing for a short time, you are a trader. Likewise, if you are investing for a long time, you are an investor.
Here are Things to Know Before Investing:
While deciding which company is profitable from fundamental analysis you have to first know history, Board of Directors, managers of the company very well. As well as that, you have to study in which sector it lies and analyze performance of the whole sector properly. You should also know about its public relations, labor relations etc.
Earnings per share or EPS
Earnings per share are a company’s profit per outstanding share of stock. Having high Earnings per Share shows the company is higher profitable.
Price-to-earnings (P/E) Ratio
P/E is one of the best tools to analyze a company fundamentally. It is the company’s share price to the company’s Earnings per Share. With this, you can know if the share is overvalued or undervalued. The higher PE ratio shows that the public is very interested to invest in that share.
Return on Equity
Return on Equity or RoE shows the performance of a company and efficiency to make profits on its shareholders’ investment. It is calculated by dividing net earnings after tax by shareholders’ equity.
Dividend Payout Ratio
A dividend payout ratio shows how much the company has earned a profit and also shows what proportion of profit is divided by a company to its shareholders out as a dividend. Higher the dividend ratio higher the company is profitable.
Now, that you know about Where to Invest, lets find our When to Invest
When to Buy and Sell Share in Nepal
After choosing the profitable company from technical and analysis, you also need to know about the right time to invest in the share market. Definitely, investing in the share market at the wrong time may subject to higher risks. Whereas, knowing when to buy and sell share in Nepal can provide many opportunities.
In the share market, there are two types of markets: Bullish market and Bearish market. When the market is going up in an upward trend then that market is called the Bullish market. And while the market is going down in a downward trend that market is called the Bearish market.
The right time to invest in shares is when there is a Bullish market because in Bullish market share you buy will rise and make you profit as investing in the Bearish market increases the risk and chance of losses. However, we can also earn in the bearish market but, earning in bearish market needs high knowledge and experience. Moreover, If you are long term investor planning to invest for 5 to 10 years, you can also invest by analyzing the right time when bearish market is about to end. Because at the end of bearish market price is low and there is low chance of falling of the share price. We also need to know that different companies have different performance on different seasons as they have different business cycles as per time and season.
For e.g.: Coca-Cola has better performance and efficiency in the summer season than in winter. So, Coca-Cola share prices may go down the winter season. Because people sentiments may go with this thought that Coco-cola doesn’t perform well in winter. Thus, investing in a Coca-Cola company in winters may add a bit risk. So, one should invest by analyzing the right time i.e. trend of the share market and business cycle of the company.
On the End Note…
With proper knowledge and patience, you can definitely earn maximum return of investment from the share market. Keeping in mind where to invest and when to buy and sell share in Nepal can help you to take enough benefit from the share market.
If you found our post helpful then please subscribe our YouTube Channel Stock Watch Nepal. Please watch, like and share our latest video from our channel