Institutional investors are becoming more prevalent in the securities industry.

By stabilizing the fluctuations in the secondary market for securities, institutional investors are thought to be necessary in shielding regular investors from the negative consequences of needless oscillations.

Up until ten years ago, the number of institutional investors in the securities market was restricted. However, according to Murahari Parajuli, the spokesperson for the Nepal Stock Exchange, there are currently 8,754 institutional investors listed. "In one month, 300 institutional investors have been added to trade in the secondary market of securities," he stated.

Not all, nevertheless, are eligible institutional investors. Thus far, 150 firms have received licenses for eligible institutional investors from the Nepal Securities Board. According to the Securities Board's guidelines, an individual must be a securities trader and established specifically for the purpose of investing in securities in order to qualify as a qualified institutional investor.

There were 46 qualified institutional investors as of January 19, 2077. An additional eighteen corporations were granted permits as qualified institutional investors on January 20, 2077. The board then announced that, at various points in time, 150 businesses had obtained licenses as institutional investors. Institutional investors in the stock market that are qualified include investment corporations, insurance companies, and various merchant bankers together with the mutual funds they oversee.

In a similar vein, institutional investors include stock dealers. Two stock dealers have been granted business permission as of right now. They work as both nabil and civilian stock dealers. The Nabil stock dealer is not yet operational. Through book building, qualified institutional investors contribute to determining the market price of the shares before the initial public offering (IPO).

An institutional investor shall get forty percent of the entire number of ordinary shares that the company issues through book building, according to the regulation. Legally speaking, they have to retain the price for the general public and lower it by 10% once they purchase at a specific price. Large volume buys and sells of shares by alleged institutional investors—who may not even be qualified institutional investors—are thought to contribute to market stability.

When the price rises because there is a shortage of shares on the market, institutional investors are thought to be required to maintain price stability by increasing supply; conversely, when the price falls sharply because of an excess supply, they are thought to be required to balance the supply and stop the price from falling.

Sanima Capital holds a Securities Board license as an institutional investor. According to Bhishmaraj Chalise, the company's CEO, investments are made only after a thorough market analysis.

"We buy shares of every company only after analyzing the financial situation including demand and supply, technology," he stated.

Investors these days only make investments based on their own whims or by keeping an eye on companies whose share prices are rising in the market. Analysis of the company's whole picture, including its financial status, is not necessary. The high share prices of businesses with precarious financial situations attest to this. When the market declines, those that invest in that way incur enormous losses. We won't allow it to occur, Chalise declared.

He asserted that institutional investors were crucial in maintaining the market's value at 2,000 points, despite the fact that it has dropped below 3,000 points during the previous three years.

"The market dropped from 1100 points to 200 points not so long ago, but things have since turned around. Since institutional investors and I are currently in the middle. We will continue to cut costs in the same manner even if the market will shrink. The market cannot decline as a result, according to Chalise. "In the past, the market fell and stuck around 1800; at that time, mutual funds played a very big role," Chalise stated. The market would not have dropped below a thousand points otherwise.

Nonetheless, institutional investors still own a small portion of the total shares available on the market. Institutional investors continue to be absent from market interventions. While institutional investors make up as much as 15% of all transactions in international stock exchanges, their proportion of transactions in our total transactions is only 1%. According to NEPSE spokesperson Parajuli, "there are significantly more institutional investors in the foreign stock market."

Nonetheless, institutional investors still own a small portion of the total shares available on the market. Institutional investors continue to be absent from market interventions. While institutional investors make up as much as 15% of all transactions in international stock exchanges, their proportion of transactions in our total transactions is only 1%. According to NEPSE spokesperson Parajuli, "there are significantly more institutional investors in the foreign stock market."

The arrival of institutional investors somewhat resolves the issue of providing more or fewer shares in the market. Conversely, the arrival of institutional investors raises demand by drawing in new investors.

"Institutional investors arrive in a structured fashion." "Individual investors do not have so many plans," says securities analyst Jyoti Dahal. "They bring together the small capital that is scattered and invest in a planned manner to get this percentage of profit in 1 year." The individual gains by investing and joining the group. Being an organization, you won't go above and above your stated profit goal if you state that you will make this amount in a year.