EXECUTIVE SUMMARY: This study aims to identify the events that influence investment decision of Nepalese investors in stock market and to determine the relationship or association between the investment decision and the events influencing such decision.The major objective of the study is to examine the relationship between stock market returns and political events that took place in Nepal during the period of May 2012 – June 2017. This study will examine the instability in the stock market due to the political events and also to examine the relationship between the independent and dependent vvariables that influence the decision of investment in stock market of Nepalese investor. The study is based on the secondary data available in NEPSE site. The data was collected 200 days back from announcement date to 10 days after the announcement date. The data were analyzed by using data analysis software like SPSS and Microsoft Excel. The data were analyzed using three different analysis; they are levene’s test, dummy variable regression and estimated average abnormal return. Levene’s test helps us to analyze the P- value of NEPSE index with each event. This shows the impact of different event in different indicies. Moreover, dummy variable regression also add extra support for the result obtain from the levene’s test. The beta value and P- value is obtain from the dummy variable regression. Similarly, abnormal returns help to obtain the abnormal return of different events on different window frame. This also gives extra support to prior analysis of the study. The research design adopted in this study is descriptive and causal comparative research design as it deals with the impact of investment on Nepalese stock market.The study focuses on market reaction to announcements of new political events using the event analysis methodology. The findings of the study provide a consistent conclusion regarding the existence of information content hypothesis in the Nepalese stock market. The study reveals that the political event has significant effect on NEPSE. The data present important evidence on the speed of adjustment of stock prices to new political information. Thus, this paper finds that the Nepalese stock market is inefficient at a semi-strong level, but there is a strong linkage between political uncertainty and common stock returns.

ACKNOWLEDGEMENTS

The study entitled “Political events influencing investment decision of Nepalese investors in stock market” has been conducted to satisfy the partial requirements for the degree of Masters of Business Administration, Pokhara University.

First of all, I would like to extend my immense gratitude to my supervisor Mr. Dipendra Karki for his valuable supervision and guidance in completing this study. I am highly indebted and very thankful for his continuous support and constructive suggestions that have enabled this research project to achieve its present form.