Determinants of stock price of manufacturing companies in Nepal

Abstract

This study investigates the determinants of stock price fluctuations in Nepal’s manufacturing sector by examining both firm specific financial indicators and key macroeconomic variables. Using secondary data from audited financial reports of selected manufacturing firms listed on NEPSE, along with national macroeconomic records, the research analyzes how Earnings Per Share (EPS), Dividend Per Share (DPS), Return on Equity (ROE), firm size and banking liquidity influence stock price movements and volatility. The study employs descriptive statistics, correlation analysis, and multiple regression models to evaluate performance patterns and assess predictive relationships. Results reveal that firm specific factors particularly EPS and DPS exhibit strong positive correlations with stock prices, highlighting the relevance of internal financial performance in shaping market valuation. ROE shows moderate relationships, while firm size remain weakly associated. However, regression results indicate that neither firm specific nor macroeconomic variables significantly predict stock price fluctuations, despite their strong correlations. This divergence suggests the presence of market inefficiencies, sentiment driven trading, and structural limitations within the NEPSE manufacturing segment. The study concludes that stock prices in Nepal’s manufacturing sector are influenced by a combination of internal financial strength, broad economic trends, and investor behavior.