MARKET INEFFICIENCIES AND INVESTMENT DECISION IN NEPALESE STOCK MARKET

Abstract

Investors channel their funds and savings into various sectors with the goal of maximizing their wealth while ensuring safety and minimizing risk. The fundamental objective of any investment is to achieve the highest possible return with the least amount of risk. With increased financial literacy, individuals are more discerning about their investment choices and seek opportunities that offer better returns than traditional options. Bank fixed deposits, once a popular choice for conservative investors, are becoming less attractive due to their low interest rates. In many cases, these rates are outpaced by inflation, resulting in negative real returns. Consequently, investors are exploring alternative avenues that potentially offer higher returns. To achieve better returns, many are turning to investments in productive sectors such as industry, trading, services, and finance. These sectors often provide more substantial growth opportunities compared to the modest returns of fixed deposits. Investors are also diversifying their portfolios by investing in various forms of assets, including equities, bonds, and stocks, which can offer better returns but come with different levels of risk. Overall, the shift from traditional savings methods to more dynamic investment strategies reflects a broader trend towards seeking higher yields and managing risk more effectively in today's economic environment.