MARKET INEFFICIENCIES AND INVESTMENT DECISION IN NEPALESE STOCK MARKET

Abstract

Investors seek to grow their wealth by choosing investment avenues that promise optimal returns while minimizing risk. Traditionally, bank fixed deposits were a popular choice; however, the low interest rates currently offered, which often fall below the inflation rate, have led many to seek alternative investment options. Consequently, people are increasingly turning to sectors like industry, trading, services, and banking for better returns. Investments in these sectors can take various forms, including creditor positions, equity stakes, and stock holdings. Investment fundamentally involves sacrificing current consumption for future gains, with the aim of enhancing future wealth. Both the potential returns and risks associated with stock investments are uncertain, as investors must navigate an unpredictable environment. While shares can be riskier compared to fixed-income securities like treasury bills or savings certificates, many investors are drawn to stocks with the hope that their prices will rise over time. To gauge a stock's intrinsic or theoretical value, one can analyze publicly available financial information. However, many investors overlook this crucial step before committing to a stock, potentially missing out on critical insights that could inform their investment decisions.