Kathmandu | Imagine wrapping up your trading day at 3:00 PM, thinking you have a clear picture of the stock market, only to check back 20 minutes later and see different numbers. Your portfolio’s value has changed, but the market is already closed and won’t open until the next trading day. This is exactly what’s happening with NEPSE’s post-close data updates, raising serious concerns about transparency and accuracy in the stock market.

Introduction

The Nepal Stock Exchange (NEPSE) plays a vital role in the financial ecosystem, providing a platform for investors to buy and sell stocks. However, an emerging issue is causing confusion and potential misinformation—NEPSE’s practice of updating stock data after market hours. Specifically, it has been observed that after the market closes at 3:00 PM, stock prices and index points change around 3:20 PM, creating misleading information for traders and investors. Such discrepancies undermine trust in market data, leaving investors uncertain about their financial decisions. In this article, we’ll explore this issue and its implications, as well as potential solutions to ensure data integrity.

Understanding NEPSE’s Data Update Process

• Timing of Data Updates

Typically, stock prices and index points are updated in real-time during trading hours, with the market officially closing at 3:00 PM. However, a troubling trend has emerged where NEPSE updates its data around 3:20 - 3:30 PM, long after the market has closed. While this may seem like a minor delay, it has significant consequences, especially when these late updates show different prices and index points compared to what was available at market close.

• Inconsistencies in Post-Close Updates

This post-close update appears to happen inconsistently, leading to confusion. Investors and traders who rely on up-to-the-minute data might check the stock prices after hours, only to find changes that were not reflected during the day’s trading.

• Example Cases of Data Changes

For instance, on Chaitra 13, the NEPSE index was at 2623.21 points with a gain of 40.47 points until 3:24 PM. However, shortly after, it changed to 39.13 points (1.51%). Similarly, on Chaitra 17, at 3:00 PM, the index showed a gain of 32.24 points (1.21%), but by 3:25 PM, it was updated to 29.82 points (1.11%). Since the market is closed at 3:00 PM and will not operate until the next trading day, these post-close changes create uncertainty for investors trying to assess their positions accurately.

• NEPSE’s Explanation

NEPSE is now using a new closing price mechanism, where the Weighted Average Closing (WAC) price is being calculated based on transactions between 2:45 PM and 3:00 PM. According to Murahari Parajuli, Information Officer for NEPSE, NEPSE has been making post-close updates for a long time, but investors are only noticing now because the index is actively changing due to this new closing price system. He clarified that the delay is not due to a technical glitch but rather because the system now requires additional time to finalize the closing price.

Impact on Traders and Investors

The delayed data updates can lead to misinformation and confusion. For instance, an investor who makes a decision based on the closing price at 3:00 PM could find that the stock they were watching has shifted in value after 3:20 PM. Since the market does not reopen until the next trading day, this can be especially problematic for traders who rely on precise, timely data to execute their strategies.

For the average investor, these late updates could cause unnecessary panic or lead to missed opportunities. The stock market depends on transparency and accuracy, and any inconsistency in data reporting risks undermining market confidence.

Why Is This Happening?

There could be several reasons why NEPSE is updating data after market close:

• New Closing Price System: NEPSE now calculates the closing price based on the Weighted Average Closing (WAC) method between 2:45 PM and 3:00 PM, which takes additional time to finalize.
• Lack of System Transparency: Investors may not be fully aware of how NEPSE's new system processes data and why changes occur after the official close.

The Need for Timely and Transparent Updates

To avoid confusion and maintain trust in the market, NEPSE must consider making its data updates more transparent. Here are some potential solutions:

• Timely Updates: NEPSE should aim to finalize and update stock prices and index points immediately after the market closes. This would eliminate any discrepancies caused by post-close updates and ensure that investors are making decisions based on accurate data.
• Clear Communication: NEPSE should communicate to investors if there are any planned updates after the market closes, explaining why these changes are necessary. This would help avoid any potential misinformation and build trust with market participants.
• Consistency in Reporting: To ensure a fair and transparent market, NEPSE must strive for consistency in how stock prices are reported. Data should be reliable, especially when it comes to crucial moments such as the market close.

Conclusion

The practice of updating stock prices and index points after the market closes is a growing issue that can cause confusion among investors and traders. The stock market is built on trust, and if market data is inconsistent or delayed, it can harm both investor confidence and trading strategies. NEPSE must address this issue by ensuring that its data is up-to-date, accurate, and transparent, particularly after the market has closed.

Ultimately, investors deserve clear, reliable information that they can use to make informed decisions. NEPSE must take steps to provide this information promptly and consistently, thereby fostering a more transparent and trustworthy trading environment.