Stockbrokers’ View on Market Information and Stock Valuation in Nepal

The paper investigates the appraisal of equity investment by stockbrokers in Nepal by using the interview technique with a semi-structured questionnaire instrument. The study found the fundamental analysis as the most widely employed approach to equity valuation in the Nepalese stock market. It also found that the P/E ratio, EPS, dividend payout and dividend yield ratios are the important tools for making investment decisions followed by good governance and quality of management of the corporate firms. The political risk is considerably influential in the Nepalese stock market. The Nepalese investors are not satisfied with the information disseminated by the corporate firms; nor are they totally dependent on news and analyses presented in financial newspapers/media for making their investment decisions. They also opined that the activities of Security Board of Nepal, the regulatory body, were not sufficient. The study also discovered the quarterly earnings; rights share issuance and dividend announcements as the most important announcements in the Nepalese market.