"NEPSE Is Up 40 Points!" What the Index Does and Doesn't Tell You

Every evening the news says something like "NEPSE rose 40 points today." Then you open your portfolio and it's red. What's going on?

What the index is

The NEPSE index is a single number that summarises how listed shares moved overall, calculated with a specific method. Bigger companies count for more. A few large banks and hydropower companies moving a lot can push the whole index up or down.

So the index is a rough picture of the market as a whole. It isn't a picture of your shares.

Why your portfolio can disagree with it

• If you hold mostly small or mid-sized companies, the big names moving the index may not matter much to you.
• If you're heavy in one sector, say microfinance, a bad day for that sector hits you hard even on an "up" day.
• A rising index doesn't mean every share rose. Often it's a handful doing the lifting.

There's more than one index

NEPSE also publishes a Sensitive index, a Float index and sector indices (banking, hydro, insurance and so on). When someone quotes a number, check which one they mean. The sector indices are often more useful for comparing against what you actually own.

Don't read tomorrow from today

One big green day doesn't mean a bull market has started, and one red day isn't a crash. The index tells you what happened. It says nothing reliable about what's next, and nothing about whether a particular company is healthy.

Use it as background, then look at your own holdings and goals.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.