FACTORS INFLUENCING STOCK PRICE BEHAVIOR IN NEPAL

Abstract

This study entitled “Factors Influencing Stock Price Behavior in Nepal” is aimed to analyze the attitude of investors towards Nepalese stock market. It sought to evaluate the investor awareness about stock trading system and to examine the determinants influencing stock price in Nepalese capital market. Among the various factors influencing investors to take decision on stock market, particular emphasis was placed on investor attitude, risk, and return due to their recognized importance in existing literature. In order to achieve these objectives like: to analyze major factors to determine the stock price behavior in Nepalese stock market. Primary data were collected from the investors, who were contacted personally from secondary market. A tailored questionnaire consisting of 25 questions was utilized for research purposes. Opinions were gathered from 300 respondents affiliated with capital market-related entities such as merchant banking, investment banking, mutual funds, investment companies, and stockbrokers. Data analysis was then applied to derive conclusions from these responses. When the current DPS surpasses the previous year's DPS, it is considered advantageous to invest in that specific script. Similarly, returns earned are influenced by investors' risk-bearing tendencies, shaped by personal, economic, and situational factors such as income, family size, expenditure patterns, and age. Furthermore, political stability directly impacts stock prices and significantly influences the capital market. The research aimed to analyze investor awareness, employing descriptive and casual comparative methodologies. The findings revealed that the primary objective for most investors was to maximize income with diverse investment growth. Investors typically seek short-term returns in the form of capital gains. Moreover, the study found that the stock market is progressively expanding, attracting individuals seeking quick profits, often without a focus on long-term investment strategies. A notable observation was the prevalence of illiteracy among investors, leading to susceptibility to manipulation by brokers through artificial transactions and peer influence. Keywords: EPS, DPS, P/E Ratio, Stock Price, Capital Market, SEBON, NEPSE.