Technology is the main reason for the recent influx of new investors in the stock market. Technology has made it easier for investors to enter the market.
In particular, reaching out to banks in villages and opening bank and demat accounts made it a way for new investors to enter the market easily.
New investors are known to come to the primary market through an application for a company’s IPO. How many of them are real, how many are not.
For example, there are 5 members in a family. If one person manages everyone’s account, there will be only one person as the main character and market investor or interested person. The remaining 4 are not included. On average, how many such investors are there? We don’t know Another question is how many people enter the secondary market and how many are stuck in the primary market.
Investors need to have a minimum basic knowledge of the market, regardless of whether they enter the primary market or the secondary market. For example, a new investor needs to know how much profit we get from the stock we are talking about and how the company associated with that stock can benefit in the future. Even if you only go to the primary market.
Now investors who enter the secondary market directly from the primary market or directly enter the secondary market need to acquire more knowledge. That is, it is important to understand how the market moves. And, what affects the company you are trying to buy is another important factor.
Because those who invest only in the primary market do not have much experience in the secondary market. And, the psychological impact of the secondary market movement can also affect him. The ups and downs in the market when buying and selling shares by entering the secondary market are having a psychological effect on the investors. He pays more when he buys shares than his profit.
When he does that, he needs to understand why the market is going up and down and how he is managing his investment in that case. If he understands that, he can make profit tomorrow and manage the loss.
Study is very important for this. The first step is to determine where, why, and how I am investing. Then I decided to invest in this company, so much money, so much time. Or even if you want to do business, invest in such a company with such a profit. Even if there is a loss, I will come out after saying that I can bear the loss.
If the investment is made by paying attention to such issues, his investment in the market will be the most systematic and less stressful. The biggest thing here is the stress of loss rather than profit and its impact is the most frightening. Profit is profit, it gives a kind of encouragement. But, the pain of loss is more than that enthusiasm. So you have to learn how to manage losses before profits. We also call it investment insurance. Just like we are adopting a kind of security everywhere, in order to reduce the risk in investment, we have to adopt the security of tomorrow’s risk in the market.
Next, to understand the company, investors need to understand the specifics of the company. For example, the company’s performance, profit and loss, the company’s management and good governance are affected. You have to be aware and knowledgeable about how to study it, where to look from, what are the sources of information. There are as many resources as there are now. But which of the following is a reliable source? That should be understood.
Because the details and reports of the same company are analyzed 10 times by 10 media. Some may have done it correctly, some may have done it knowingly, or some may have done it on the basis of conjecture. Some have analyzed only a few topics, which may not give us enough information.
Within 3 months, 6 months after the company was established, we made a projection that we would do this business for the next 10 years. We are not in a position to make a profit.
What is a reliable source for investors to get enough information? If they go to the company’s website and look at the annual reports and try to understand it, it can be reliable. We have not developed reliable resources. No matter how many online media outlets there are, there is no basis for those who write that they are reliable. Because different people’s analysis is different. If we get what comes from the company, it is reliable. Not all of the things explained can be reliable.
Some of the information is such that even the companies have not been able to provide enough. We call the press release issued by the company official, but it is a weakness in its authenticity. Even there he does not know how to give enough information.
If one of the microfinance institutions is surveyed now, not all of them have their own official website. Not everyone who has a website has their own annual financial statements.
To enter the primary market you also need to know about the company.
You should not buy shares of any company even in the primary market. We cannot get the desired profit by buying shares of any company. The market should not always reach Rs 500-600 at the same time when investing Rs 100 in this way. There is no such thing as a constant rise.
Now more financial institutions are coming. And, what they have given us is a confident, well-regulated body, that their regulators are comparatively better than others. Tomorrow, companies from other sectors, such as manufacturing, services, etc., started coming from outside the sector, and there were laws to issue shares to those companies in the market, which does not have to be 5-10 years of history. If there are legal issues that can come in the market even after carrying a history of 6 months, then any company wants to come in the market. At that time, the general public has to evaluate. Investors need to understand his potential, his business, his ability to make a profit, good governance, his future plans for the group.
Like now the cement company is trying to come. Companies from any service and health sector or any other sector may come to the market tomorrow. For example, it comes to the international market in 6 months and not a year. They come in the form of issuing shares in money rather than in rupees. Sometimes there is a company that is limited to one room. He can open the shares today only by showing a possibility that I will do this business tomorrow. His business has not started yet, the business will start after 2 ÷ 4 years.
Similarly, if the OTC market in Nepal is to be managed in such a way tomorrow, we will have to study more. For example, if we go to the OTC to be listed on the stock exchange only after reaching a certain criteria, then we have to study more than that. We now have the criteria that the company must have completed at least one year, and that the financial statements for that period must be made public. This is our destiny.
This kind of environment in the stock market, becoming a law, we must be lucky to invest. But, within 3 months, 6 months of the company being established, we made a projection that we would do this business for the next 10 years, and if we had to raise money to do business, we would have to invest in stocks. By applying, we are not in a position to make a profit.
(Based on an interview with Share Analyst Ravindra Bhattarai)