Stock Market Glossary

An options contract where the strike price equals the current market price of the underlying asset. For example, if Nifty is at 24,000, a 24,000 strike call or put option is ATM.

The excess return of an investment relative to its benchmark index. A mutual fund with alpha of +2% outperformed its benchmark by 2 percentage points.

A mandatory yearly meeting of a company's shareholders where the board presents financial results, declares dividends, and discusses business strategy. Required under the Companies Act, 2013.

Simultaneously buying and selling the same asset in different markets to profit from price differences. In India, arbitrage between NSE and BSE, or cash and futures markets, is common.

The lowest price at which a seller is willing to sell a security. Also called the offer price. The bid-ask spread indicates market liquidity.

Not to be confused with At The Money — this is the common banking machine for cash withdrawals and basic transactions.

A prolonged period of falling stock prices, typically 20% or more from recent highs. India experienced a bear market during COVID-19 (March 2020) when Sensex fell from 41,000 to 26,000.

A measure of a stock's volatility relative to the overall market. A beta of 1.2 means the stock is 20% more volatile than the Nifty 50. High-beta stocks gain more in bull markets and fall harder in corrections.

The highest price a buyer is willing to pay for a security. The difference between the bid and ask price is the bid-ask spread.

India's oldest stock exchange, established in 1875. Located in Mumbai, it's the world's 10th largest exchange by market capitalization. Its benchmark index is the S&P BSE Sensex (30 stocks).

A bulk transaction of at least 5 lakh shares or Rs 10 crore worth executed in a single trade on the institutional trading platform. Block deals are disclosed to the exchange but not visible in the regular order book.

Large, well-established, financially stable companies with a track record of reliable performance. Examples: Reliance Industries, TCS, HDFC Bank. Blue chip stocks are considered safer investments.

A derivative contract giving the buyer the right (not obligation) to buy an underlying asset at a specified strike price before expiration. Bullish traders buy call options expecting prices to rise.

SEBI-mandated trading halts triggered when indices move beyond threshold levels: 10% (1st), 15% (2nd), and 20% (3rd). Prevents panic selling and flash crashes.

The mean annual growth rate of an investment over a specified period longer than one year. Formula: (Ending Value / Beginning Value)^(1/n) - 1. A more accurate measure than simple returns for multi-year investments.

The ratio of advancing stocks to declining stocks on an exchange. A CMS above 1 indicates more stocks are rising than falling, signaling broad-based buying.

The latest traded price of a stock or security on the exchange. Changes in real-time during market hours.

Any action taken by a company that affects its shareholders. Examples: dividends, stock splits, bonus issues, rights issues, buybacks, and mergers.

The last 15 minutes of trading (3:15 PM to 3:30 PM IST) on NSE/BSE when institutional investors and MFs typically place large orders. Closing auction prices determine the day's official close.

When you actually take ownership of shares by paying the full amount, rather than squaring off the position intraday. Delivery trades settle on T+1 day in India.

An electronic account that holds your securities (stocks, bonds, mutual funds) in digital form. Mandatory for trading in Indian stock markets. Deposited with NSDL or CDSL.

An institution that holds securities in electronic form. India has two depositories: NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).

Indian mutual funds, insurance companies (LIC, SBI Life), banks, and pension funds that invest in Indian markets. DIIs are considered stabilizing forces, often buying when FIIs sell.

A portion of a company's profits distributed to shareholders. In India, dividends are taxed at the investor's income tax rate (TDS deducted if above Rs 5,000/year from a single company).

A preliminary document filed by a company planning an IPO. Contains detailed information about the business, financials, risk factors, and proposed share sale. Filed with SEBI for review.

A major US stock market index tracking 30 large, publicly listed companies. The Dow Jones Industrial Average (DJIA) is a key indicator of US market sentiment, which influences Indian markets.

Net profit divided by the number of outstanding shares. A company earning Rs 100 crore with 10 crore shares has an EPS of Rs 10. Higher EPS generally indicates better profitability.

Ownership interest in a company, represented by shares. Equity shareholders have voting rights and may receive dividends. In portfolio terms, equity refers to stock investments.

A fund that trades on stock exchanges like a stock. Tracks an index, sector, or asset class. Examples: Nifty BeES, Gold BeES, Bank Nifty ETF. Lower expense ratio than mutual funds.

The date on which a stock begins trading without the dividend value. If you buy before this date, you receive the dividend. On or after this date, the dividend amount is deducted from the stock price.

The nominal value of a share as stated in the company's charter. For most Indian stocks, it's Rs 1, Rs 2, Rs 5, or Rs 10. Different from market price. Used for dividend calculations.

Derivative contracts traded on exchanges. Futures obligate both parties to buy/sell at a future date. Options give the buyer the right (not obligation). India's F&O market is the world's largest by volume.

Foreign funds, portfolio investors, and institutions investing in Indian markets. Now technically called FPIs (Foreign Portfolio Investors). FII flows are a key market indicator.

The total market value of a company's shares available for public trading (excluding promoter holdings, government stakes, locked-in shares). Sensex and Nifty use free float methodology.

The unofficial premium at which IPO shares are traded in the grey market before listing. A GMP of +₹50 means the IPO is expected to list ₹50 above its issue price. Not guaranteed.

Stocks of companies expected to grow revenue and earnings faster than the market average. Usually reinvest profits rather than paying dividends. Example: Infosys in its growth phase.

An order type that remains active until executed or cancelled by the trader. In India, most brokers support GTC orders for a limited period (typically 30-90 days).

A strategy to offset potential losses in one investment by taking an opposite position in a related asset. Example: buying put options to protect against a stock portfolio decline.

The duration an investor holds a security. Short-term (less than 12 months) gains are taxed at income tax rates. Long-term (12+ months) equity gains above ₹1.25 lakh are taxed at 12.5%.

Algorithmic trading that executes thousands of orders per second. HFT firms use co-located servers at exchange data centers for minimal latency. Controversial for market impact.

A statistical measure of a section of the stock market. India's major indices: Nifty 50 (NSE), Sensex (BSE), Bank Nifty, Nifty Next 50, Nifty Midcap 150.

Buying and selling stocks within the same trading day. Positions are squared off before market close (3:30 PM IST). Requires a trading account and involves higher risk.

When a private company offers its shares to the public for the first time. Companies file DRHP with SEBI, set a price band, and investors apply through ASBA. Minimum investment = 1 lot.

A one-time investment of a large amount, as opposed to SIP (Systematic Investment Plan). Used when an investor has surplus capital and wants to deploy it immediately.

A high-yield, high-risk debt instrument issued by companies with lower credit ratings. In India, these are rated below BBB by credit rating agencies. Higher returns come with higher default risk.

Mandatory identity verification process for opening demat, trading, or mutual fund accounts. Requires Aadhaar, PAN, and address proof. One KYC works across all SEBI-regulated entities.

A government savings scheme that doubles your investment in a fixed period. Available at post offices. Guaranteed by the government, but not market-linked.

An order to buy or sell a security at a specific price or better. A buy limit order executes only at or below the specified price. Provides price certainty but no execution guarantee.

The minimum number of shares you must trade in a single F&O transaction. Defined by the exchange for each stock. For Nifty options, the lot size is 25 units.

Owning a security with the expectation that its price will rise. "Going long" on a stock means you profit if the price goes up. The opposite of a short position.

Profits from selling equity shares held for more than 12 months. Exempt up to ₹1.25 lakh per year. Above that, taxed at 12.5% without indexation. For debt mutual funds, taxed at income tax rate.

Total value of a company's outstanding shares. Market Cap = Share Price × Number of Shares. Indian classification: Large Cap (Top 100), Mid Cap (101-250), Small Cap (251+).

Buying stocks using borrowed money from your broker. You pay only a percentage (margin) of the total trade value. Amplifies both profits and losses. Regulated by SEBI.

A professionally managed investment fund that pools money from multiple investors to buy securities. Regulated by SEBI. Categories: Equity, Debt, Hybrid, Index, ELSS. India's MF AUM exceeds ₹60 lakh crore.

A technical analysis indicator that smooths price data by calculating the average price over a specific period. Common types: 50-day, 100-day, 200-day. Used to identify trends.

A special one-hour trading session held on Diwali evening (Laxmi Pujan). A tradition on Indian exchanges symbolizing prosperity. Markets typically see positive sentiment during this session.

NSE's benchmark index of the 50 largest and most liquid Indian companies. Managed by NSE Indices (formerly IISL). Represents ~65% of total free-float market cap of NSE-listed stocks.

An index of the 12 most liquid and large banking stocks listed on NSE. A key indicator of the banking sector's health. Heavily traded in F&O segments.

A loan or advance where the borrower has stopped paying interest or principal for 90+ days. High NPA levels weaken banks' balance sheets and profitability. A key metric for banking stocks.

The per-unit value of a mutual fund. Calculated daily by dividing total net assets by outstanding units. You buy/sell mutual fund units at NAV. Different from stock price.

India's largest stock exchange by volume. Established in 1992, pioneered electronic trading in India. Benchmark index: Nifty 50. Headquartered in Mumbai.

Total number of outstanding derivative contracts (futures/options) that have not been settled. Rising OI with rising prices signals bullish sentiment. Falling OI with rising prices signals short covering.

An options contract with no intrinsic value. A call option is OTM when the strike price is above the current market price. A put option is OTM when the strike price is below the current market price.

Stock price divided by earnings per share. A P/E of 25 means investors pay ₹25 for every ₹1 of earnings. High P/E may indicate overvaluation or growth expectations. Compare within the same sector.

A 10-character alphanumeric identifier issued by the Income Tax Department. Mandatory for opening demat, trading, and mutual fund accounts. Also needed for tax filing.

The collection of all your investments — stocks, mutual funds, bonds, gold, etc. A well-diversified portfolio reduces risk by spreading investments across asset classes.

A derivative contract giving the buyer the right to sell an underlying asset at a specified strike price. Bearish traders buy put options expecting prices to fall.

When a promoter hypothecates their shares as collateral for a loan. High promoter pledging (>50%) is a red flag — if the stock falls, lenders may sell pledged shares, creating further selling pressure.

The date set by a company to determine which shareholders are eligible for dividends, bonuses, or rights issues. You must own the shares on this date to receive the corporate action benefit.

The final prospectus filed with SEBI before an IPO opens. Contains updated financial details, risk factors, and the price band (for book-built issues). Investors should read the RHP before applying.

India's central bank. Sets monetary policy (repo rate, CRR, SLR), regulates banks, manages forex reserves, and controls inflation. RBI rate decisions directly impact banking and finance stocks.

A momentum oscillator measuring the speed and change of price movements. Ranges from 0 to 100. Above 70 = overbought (potential sell signal). Below 30 = oversold (potential buy signal).

When a company offers additional shares to existing shareholders in proportion to their holdings, usually at a discount to market price. Shareholders can accept, partially accept, or decline.

India's market regulator established in 1992. Regulates stock exchanges, brokers, mutual funds, FIIs, and listed companies. Protects investor interests and promotes market development.

BSE's benchmark index of 30 large, well-established companies. Full name: S&P BSE Sensex. A barometer of Indian market sentiment. One of the oldest indices in Asia (base year: 1978-79).

Selling shares you don't own (borrowed from a broker) with the expectation of buying them back at a lower price. Profit = Sell Price - Buy Price. Loss if the price rises instead.

Investing a fixed amount in mutual funds at regular intervals (monthly/weekly). Averages out market volatility through rupee cost averaging. The most popular way Indians invest in mutual funds.

An order to automatically sell a security when it reaches a predetermined price, limiting potential losses. Example: buying at ₹500 with a stop loss at ₹470 caps loss at 6%.

Dividing existing shares into multiple shares to increase liquidity. A 1:2 split means 1 share becomes 2. The share price halves but total portfolio value remains the same. Example: MRF split from ₹10,000 to ₹5,000.

Companies ranked 251st and beyond by market capitalization on Indian exchanges. Higher growth potential but also higher risk. Nifty Smallcap 250 is the benchmark index for this segment.

Closing an open position by taking an opposite trade. If you bought 100 shares, selling 100 shares squares off the position. Mandatory for intraday positions before market close.

Total value of shares traded during a period. High turnover indicates active trading and liquidity. India's daily market turnover regularly exceeds ₹1 lakh crore.

An account with a SEBI-registered broker that allows you to place buy/sell orders on the stock exchange. Works in conjunction with a demat account (for holding) and bank account (for funds).

The unique symbol or code assigned to a security on the exchange. Example: RELIANCE (Reliance Industries), TCS (Tata Consultancy Services). Used to identify stocks on trading platforms.

India's first mutual fund, established in 1963 by the RBI. Now split into UTI Mutual Fund, SBI Mutual Fund, and LIC Mutual Fund. UTI AMC is one of India's largest fund houses.

The total number of shares traded during a trading session. High volume confirms price movements. Low volume rallies may lack conviction. Volume analysis is key for technical traders.

The degree of price variation in a security over time. India VIX (Volatility Index) measures expected 30-day volatility of Nifty 50. High VIX = high fear/uncertainty. Low VIX = market complacency.

Buying stocks trading below their intrinsic value. Popularized by Benjamin Graham and Warren Buffett. Involves fundamental analysis to find undervalued companies with strong fundamentals.

The difference between a company's current assets and current liabilities. Positive working capital means the company can meet short-term obligations. Negative working capital signals potential liquidity issues.

The income return on an investment, expressed as a percentage. Dividend yield = Annual Dividend / Share Price. Bond yield = Annual Interest / Bond Price. Higher yield means higher income relative to price.

A debt security that doesn't pay periodic interest. Instead, it's issued at a deep discount to face value and redeemed at par. The difference between issue price and face value is the investor's return.