Nepse plans to launch ‘Nepse 30’ index within a month

Nepal Stock Exchange (Nepse) is gearing up to launch the new stock trading index ‘Nepse 30’ within a month. After completing the necessary technical and policy preparations, the Nepse plans to bring ‘Nepse 30’ into operation by the first week of October.

The ‘Nepse 30’ index is currently being tested internally. The test, which started on July 25, has shown that the ‘Nepse 30’ index can be operated. According to Nepse officials, an official announcement on it will be made soon. 

The procedure prepared for the operation of ‘Nepse 30’ has been submitted to the Nepse board for approval. The upcoming board meeting of the Nepse is likely to endorse it, paving the way for the operation of the ‘Nepse 30’ index.

Nepse Spokesperson Murahari Parajuli said that the related procedure has already reached the Nepse board. “The upcoming meeting of the board will discuss the procedure,” he said, “After the approval of the board, the ‘Nepse 30’ index will come into operation.”

According to Parajuli, Nepse has also completed technical preparations including the IT system required to operate the ‘Nepse 30’ index. Currently, a trial is being carried out internally selecting a few companies. 

Nepse has envisioned Nepse 30 as an index based on the share trading of 30 selected companies. The new index will comprise the top 30 companies that meet the criteria set by Nepse among all the listed companies.

However, Nepse 30 will not be a separate index. At present, there are 13 sub-indices in Nepse alongside sensitive, float, and sensitive float indices.  According to Nepse, companies from six sectors including banks and financial institutions, microfinance, insurance, hydropower, manufacturing, and trade and services will be included in the Nepse 30 index. Each of these sectors will have a minimum of one company to a maximum of eight companies in the index.

Companies having profits in the last three years, having earnings per share of more than 10 percent of the paid-up capital, and having earnings per share higher than the inflation will be eligible for the ‘Nepse 30’. Similarly, the companies are also required to have issued at least 25 percent of the shares to the general public and have at least 20,000 shareholders.

Similarly, companies’ average daily turnover in the last six months should be at least 2.5m, and their average daily share trading of 5,000 units. 

The Nepse has said that it is introducing ‘Nepse 30’ with the aim of developing, operating, and managing indices to strengthen secondary market transactions. 

The ‘Nepse 30’ index will be implemented as an index based on market capitalization including immediately tradable (free float) shares.

Nepse had previously prepared to bring the ‘Nepse 50’ index. However, it went for the ‘Nepse 30’ arguing that there could be problems in managing 50 companies.