Look Into The NEPSE Market Participation Measurement Through Value Per Transaction


While the total turnover in the stock market has been taken into consideration while analyzing the market participation, it might be misleading in the sense that higher turnover might be the result of larger investors exiting and retail investors getting in due to Fear of Missing out (FOMO). Similarly, lower volume might not necessarily indicate lower near-term market participation as larger investors may be entering slowly at the behest of retail investors.

Let’s look into the NEPSE market participation measurement through VPT, what does the VPT (Value Per Transaction) mean within the stock market?

Value per Transaction (VPT)

Value per Transaction (VPT) measures the average turnover value per transaction, i.e. overall turnover divided with the aid of using overall transactions. VPT tells us approximately the marketplace participation, whether or not the investors presently trading are retail investors or large investors. Higher VPT stages ought to imply that large investors are entering. Lower VPT stages are taken into consideration to be an illustration that the maximum of the contributors is retail investors withinside the marketplace.

Value per Transaction (VPT) Trend vis-à-vis Nepse Index

The bull phase began in November 2019. In November 2019, NEPSE was trading around 1110. Since then, it has risen to the 3180 level (closing price) by mid-August 2021. The graph above shows that the value per transaction (VPT) began to decline from mid-February (2700 level), despite the bull market and the turnover increased from this period. Since February 2021, individual investors appear to have played a greater role as market participants than large investors.

From all-time highs (mid-August) to the present, the NEPSE Index has seen two major rises (October 20-November 3) and (December 14-January 17). on the first rise, VPT soared from 77,000 to just over 100,000. This suggests that large investors had large participation in the market. The market has begun to decline since November 3rd, similar to VPT, indicating increased involvement of retail investors.


In the Nepalese context, investors consider turnover data as the average volume per transaction, analyzing market participation/sentiment that may be incomplete. Adding VPT tools to your analysis may give you better results in sentiment analysis


VPT is just one of many tools for analyzing market sentiment through participation. It is not advisable to invest in just one tool, as one tool is not always 100% correct.


~Roshni Pandit

Technical Analyst-CBIL Capital