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Research & Notes

Systematic studies, technical essays, and quantitative explorations focused on NEPSE.

[Market Microstructure]

Trying to Make Your Next Investment? A Pricing Check on Banking, Insurance, and Hydropower sector

To identify potential investment opportunities, this article utilizes relative valuation—a method that benchmarks a company’s price against similar peers using key metrics like P/E, P/B, EV/EBITDA, and Graham Value rather than forecasting future cash flows. By applying these filters to the banking, insurance, and hydropower sectors, the analysis reveals clear disparities in market pricing: PCBL emerges as the only fundamentally undervalued choice in banking, while the insurance sector currently shows no bargains as all stocks trade above their conservative safety ceilings. Conversely, in the hydropower sector, MANDU and USHEC are identified as undervalued based on their favorable EV/EBITDA positioning relative to their peers. Ultimately, while these metrics are powerful tools for stripping away market sentiment to uncover potential value, the authors emphasize that they should serve as a starting point for deeper due diligence rather than a final indicator of performance, as low valuations can sometimes mask underlying risks.

Jul 4, 2026 | 12 min read

  • Value Investing
  • Relative Valuation
  • Financial Analysis
  • Equity Research
  • Stock Market
  • Fundamental Analysis

[Risk Management]

The Martingale Paradox: Why “Quitters Never Win” Fails in NEPSE

This study applies the Martingale betting strategy to five years of NEPSE (Nepal Stock Exchange) daily close data to evaluate its viability as a trading approach. Using Python-based backtesting, Monte Carlo simulation across 1,000 paths, and exponential capital modeling, the research finds that NEPSE's win probability of 0.4520 and a maximum losing streak of 21 consecutive days render the strategy mathematically unsustainable. With a realistic base wager, the capital can survive only approximately 7 doublings — far short of the 21 required. Across all simulated scenarios, with and without transaction fees, the probability of ruin converges to 100%, demonstrating that the Martingale system's failure in this market is not a matter of bad luck, but a structural inevitability built into the strategy itself.

Apr 11, 2026 | 12 min read

  • Backtest
  • Martingale Strategy
  • Research