Factors Influencing Investors Awareness in Nepalese Stock Market

Abstract

The commencement of the capital market has granted investment opportunities for individuals and institutional investors in Nepal. The capital market acts as a mechanism that creates investment alternatives for the saving or surplus units and source of long term funds for individuals, firms and the government. Capital market plays a vital role in the economic development by creating the employment opportunities through capital formation and acting as the intermediaries between the saving units and the deficit units. But, the mere existence of the capital market does not guarantee the economic growth. This mechanism creates the micro-level saving mobilization, an opportunity and challenges too. The financial literacy and awareness level are the crucial elements for the healthy growth of the market. The main purpose of the study is to find the level of awareness among the stock investors in Nepalese capital market. The study also analyses the factors influencing investor awareness. In this study 104 samples were taken from the whole investors/clients. In order to conduct this study, descriptive research design has been adopted. The source of information for this research was primary data collection from the investors. The major source of the primary data was structured questionnaires which were distributed and collected from the investors who invested in share market. For the purpose of analysis of the data, the data collected from the survey were coded for statistical analysis. SPSS tool was used to organize the data, determine significant relationships and identify difference or similarities with & between different variables under study. The findings from Z test show that there is statistically significant relationship between investor awareness, fundamental and technical analysis, education and training programs, social learning and motives, evaluation of investment alternatives, regulator’s rules and regulations and information dissemination. Pearson correlation coefficient shows that investor awareness and the factors influencing it are positively correlated. It is concluded that the level of investor awareness is moderate i.e. mean = 3.72 in Nepalese stock market. Most of the Nepalese investors use only fundamental analysis v

for analyzing investment on stock. They analyze debt/equity, price/earnings, assets and liabilities, dividends, cash flow, sales, earnings estimates, growth, etc. Majority of them do not conduct technical analysis such as trend analysis, momentum analysis, chart analysis, moving average etc due to lack of knowledge. Thus, trainings, workshops & seminars regarding investments should be carried on a regular basis in various parts of the country. During such programs, the investors should be educated about technical aspects of investment, nature of risk and return, investor rights and obligations, new financial products, benefits of investing etc. NEPSE has to ensure that all companies share all relevant information on a timely basis so that the stock price reflect their company’s status more accurately.