Digitalization has played a key role in democratizing market access, particularly the introduction of the Trade Management System (TMS) by the Nepal Stock Exchange (NEPSE). The system has enabled hundreds of thousands of Nepalese to trade securities from home, significantly reducing transaction costs and barriers to entry. As of 2025, 350 individual investors have registered with TMS to participate in just one of the studies, which indirectly indicates the widespread use of the platform. However, simplification of access, being an undoubted progress, also carries certain risks. Digital channels accelerate the spread of not only useful information, but also rumors, disinformation, which can increase the irrational behavior of investors, especially those who do not have sufficient experience and knowledge.

Behavioural aspects play a significant role in the Nepalese stock market. Research shows that local investors’ decisions are often influenced by cognitive biases. Among the most common is herd behaviour, where investors follow the crowd without doing their own research; overconfidence in one's ability to predict the market; disposition effect, which is a reluctance to take losses and sell winning assets prematurely; loss aversion, which causes one to avoid risk even when the outlook is good; and representativeness, where recent events or striking examples have a disproportionate effect on expectations. Investors often rely on rumors and market hype rather than fundamental analysis of companies. The type of news and its relevance also have a significant impact on investment decisions.16These behavioral patterns are particularly common in emerging markets, where information asymmetries and a lack of quality analytics are common. Understanding these psychological aspects is critical to developing effective investor protection measures and financial education programs, as a market driven by emotion rather than fundamentals is more prone to volatility, bubbles, and subsequent sharp corrections.