NEPSE Scraps Controversial Weighted Average Price Calculation: What Does it Mean for Nepali Stock Market Investors?
Hey Nepal stock market enthusiasts! Big news from Kathmandu today! The Nepal Stock Exchange (NEPSE) has just announced a significant change that’s likely to impact how we see the stock market move. They’ve done away with the much-debated method of calculating indices based on the weighted average price of the final 15 minutes of trading.
This is a major shift, and many investors have been clamoring for it. Why? Well, the previous method, which had been in place since March 21st, often led to what many felt was an artificial dragging down of the market.
Murahari Parajuli, the NEPSE spokesperson, confirmed the change, saying the new system was tested today and will go live on Monday. Note that tomorrow, the market will be closed due to the Ghatasthapana public holiday.
So, how will the NEPSE calculate indices now? The new method is much simpler: The indices will now be based on the final traded price of the day. No more averaging the activity during the closing minutes!
The old system used the weighted average of all trades between 2:45 PM and 3:00 PM, which caused a lot of complaints from investors. They argued that it often painted a misleading picture, sometimes pushing the market downwards unfairly.
What were the problems with the previous calculation method? It wasn’t just about the perception of downward bias. There were actual errors in the calculation process! Brokers, in particular, were vocal about these issues. They cited the NEPSE‘s automated system as outdated and not up to par, contributing to the inaccuracies.
For example, after the market closed on July 27th, the weighted average calculation initially showed that the NEPSE had dropped by two points. The reality, before adjustment, was that the index actually gained ten points. NEPSE later apologized and corrected the error, revising the index to a seven-point gain. This kind of discrepancy fueled investor concerns and added pressure for change.
This move by NEPSE should bring some relief to investors who felt the previous method was impacting the stock market. This change reflects a responsiveness to investor feedback and hopefully will contribute to a more accurate and transparent view of the Nepali stock market. Stay tuned for more updates on how this impacts your investment strategy. Keep up-to-date with all of the latest stock market news in Nepal by following your favorite sources! Happy investing!
