CHAPTER - IV DATA PRESENTATION AND ANALYSIS

4.1 Introduction This section provides interpretation and analysis of secondary data. Thus this section is exclusively devoted for the analysis of common stocks of different companies through price trends, signaling factors impact on NEPSE index with the help of NEPSE index provided by Nepal Stock Exchange Center, volume of stock traded, Rate of listing of New Companies in Secondary Market and maintenance of them in NEPSE is considered. For doing such h presentation statistical tools such as regression analysis, bar diagram, pie chart, t-statistics are used.

4.1.1 NEPSE Index Market indexes are used to determine the relationship between historical price movements and economic variables and to determine the systematic risk for individual securities and portfolios. The index is taken as a measuring tool whether the performance of stock market is good or not. This clearly focuses on the price of stocks that is increasing or decreasing in the market. Because the prices of stocks go up and down in a particular period compared to the previous period as disclosed by index. The highest index suggests the increase in market price of the stocks and implies the better performance of companies and viceversa. Thus the NEPSE index shows the behavior of stock prices in the capital market.

The computation formula for price index is as follows:-

Each days index =

 

 

 

 

01=

100

Where, P01 = NEPSE Price Index P1 = Today s Stock Price Q1 = Listed Shares (i.e. no. of Shares Outstanding) Q0 = Base Listed Shares.

Fiscal year 2005/06 2006/07 2007/08 2008/09 2009/10

Table 4.1 NEPSE Index NEPSE index (in Millions) 386.83 683.95 963.36 749.1 477.73

Change in percentage 34.93 76.81 40.85 -28.60 -56.80

Source :Trading Reports, NEPSE

Fiscal Year NEPSE Index (In Million) Percentage Change The above figure shows the instability in share price of stocks in secondary market. Due to a increment in the share prices of banks, financial institutions, hydropower companies and development banks, the NEPSE index increased notably over the year form 2005/06 to 2007/08 then after it starts decreasing till now. The restoration of peace, an improvement in listed companies financial performance and, most importantly, the central bank's direction, dated 26 March 2007, to double paid-up capital for banks and financial institutions contributed a remarkable increment in share prices and subsequently the stock market indices.

But it remained for no more time. The stock market opened with the NEPSE index of 222.04 points at the beginning of the FY 2003/04 and ended with 477.73 points in the FY 2009/10. The NEPSE index increased highest (76.81%) in the fiscal year 2006/07 it decreases with lagre points by 56.80 in the fiscal year 2009/10 compared to the index of previous year. Which shows that there happened many ups and downs in the stock market.