Growth of stock market after introduction of online trading: A proof from India and Pakistan

-Narendra Kumar Agrawal

*Note:

• 1^st year represents the year when online trading system was implemented.
• 2^nd year represents the next year after implementation of online trading system.
• Current index value is taken as per 9^th Aug, 2017.

Investors are in confusion on how Nepali stock market will react once the most talked about trading- online trading is introduced in the country.  This can further be estimated if we observe the market reaction of Indian Stock Exchange and Pakistan Stock Exchange once the online trading has been introduced. During the review period, Indian Stock exchange and Pakistan stock exchange have experienced growth in index price after the year of implementation of online trading. Even International Journal of Engineering and Management Sciences reported more numbers of investors had entered into share market after the introduction of online trading in these countries. Likewise, annual report of RSEB has also mentioned that number of users had been increased to 45 from 32 within a year of online trading implementation

Keeping into account the share market movement in SAARC nations, the introduction of online trading system seems to be a positive factor that can boost up the share market. Most of the share brokers companies, investors, media portals, concerned authorities and experts are also in the favor of new system. These involved parties expect the positive trend will be visible in the share market.

The fully automated system will allow investors to post their buy/sell orders and settle transactions through the online system. The system, if implemented, is expected to boost the country’s stock exchange. Such automated trading will further encourage more numbers of investor to enter into market. Trading, today, is limited only within the valley. However, once, online trading of stocks begins; trading of shares will go beyond the capital city. Provided that, a large number of residents have migrated to abroad, non-resident Nepalese can also invest on securities. Online trading step can also be seen as a step to welcome more foreign investors. This is likely to increase daily turnover of shares volume and value. Investors can buy or sell securities from their computers or smart phones once this system starts with full-fledged operation.

Although risk of hacking and manipulation of online trading system is seen as a threat of online trading system in the country, however, if implemented with a rigid protection of investors, the system can be a milestone in the trading sector. 

Author: Mr. Agrawal (Investor):