The support of the Maoists, who were the largest party in the last election, would be the key for forming a new government, but they have said they would not take part in a government or even the assembly until an independent investigation is ordered into alleged election irregularities. Outside observers have declared the election free and fair.
The fourth-place finisher with 24 seats, Rastriya Prajatantra Party Nepal wants Nepal to revert to a Hindu nation and restore its deposed monarchy. Smaller parties have only a few seats among themselves.
Of the assembly seats, 240 were directly elected, 335 are distributed proportional to each party's vote percentage and the remaining 26 are appointed by the government.
Chief Election Commissioner Neel Kantha Upreti said the parties have been given a week to name their candidates for the proportional seats, then the full assembly would be formed.
Nepal's centuries-old monarchy was abolished and a president was chosen by the Constituent Assembly that was elected in the last election in 2008. Since then, four coalitions in four years were unable to govern because parties squabbled over who would be the prime minister and who would get key portfolios in the government.
That assembly collapsed in 2012 after failing to finish a new constitution. Holding fresh elections took more than a year.
It is expected to take weeks before a new government takes shape, and until then the interim government led by Supreme Court Chief Justice Khilraj Regmi will continue to run the administration.