My reply to Santosh Raj Bajgain ji on his comment on my own post.
Santosh ji,
NEPSE has adopted value weighted method to calculate the index. In this method, market capitalization is very important factor. (See http://topicbin.blogspot.com/…/how-is-nepse-index-calculate… and http://202.11.2.113/SEBM/ronso/no9_4/10_CHHATKULI.pdf).
NTC's paid up capital is 15 Arab and its Market Capitalization is 94
Arab 20 corer at the share price of Rs 628. Out of about 100 Kharb total
market capitalization, NTC has nearly 1 Kharb, means about 10%. A single
company having 10% of market capitalization, it is huge. Hence, it has a
big impact on overall index.
Other big companies may neutralize NTC's impact.
But, the index for individual investor is just something not real. Many times, when market nose dives, I stay in profit and sometimes, when market jumps, I stay bleeding. Therefore, my experience as an individual is that not on index, we should be putting our information, time, energy and resources on selecting and investing in companies.
Other big companies may neutralize NTC's impact.
But, the index for individual investor is just something not real. Many times, when market nose dives, I stay in profit and sometimes, when market jumps, I stay bleeding. Therefore, my experience as an individual is that not on index, we should be putting our information, time, energy and resources on selecting and investing in companies.
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