Understanding stock market terminology is essential for traders. Here are some important terms explained in a simplified manner:
A candlestick pattern where a large red candle fully engulfs the previous green candle, indicating a potential downtrend.
Beta measures a stock’s volatility compared to the market. A beta of 1 is market-average; above 1 is more volatile.
Large, reputable companies with strong financials and consistent performance. Preferred for long-term investment.
BSE stands for Bombay Stock Exchange, Asia’s first stock exchange and one of the largest in India.
Specific days when the Bombay Stock Exchange is closed for trading, usually on national or religious holidays.
A continuation chart pattern showing a brief consolidation before the price resumes its upward trend.
A green candle that fully engulfs the previous red candle, signaling a potential bullish reversal.
A market condition where prices are generally rising and investor sentiment is positive.
CAGR stands for Compound Annual Growth Rate, indicating the annual growth rate of an investment over time.
CRR is the percentage of total deposits that banks must hold as reserves with the RBI, affecting liquidity.
A market where raw or primary products like gold, silver, oil, and agricultural goods are traded.
Potential liabilities that may occur depending on the outcome of a future event, not recorded until likely.
A financial ratio showing the proportion of debt to shareholders' equity, used to assess financial leverage.
CapEx is spending on assets with future benefits; RevEx is for day-to-day operations with short-term impact.
Cash flow shows actual movement of cash; fund flow shows financial health via movement of working capital.
NSDL stands for National Securities Depository Limited, handling securities in dematerialized form in India.
CDSL stands for Central Depository Services Limited, a depository that stores securities electronically.
Both are depositories in India; NSDL is linked to NSE, while CDSL is linked to BSE.
Equity shares provide ownership and voting rights; preference shares offer fixed dividends with no voting rights.
Equity shares offer variable returns and voting rights; preference shares offer fixed returns and priority on dividends.
A strategy where traders hold positions for days to months, aiming to profit from medium-term market trends.
IPO is a company's first public offering; FPO is a follow-up offering by a company already listed.
Sensex and Nifty are benchmark indices representing top companies on BSE and NSE, respectively.
Divide the total dividend paid by the number of outstanding shares.
A pattern with a long lower shadow and no upper body, signaling a possible bullish reversal.
EPS = Net Profit / Total Outstanding Shares. It reflects profitability per share.
Earnings Before Interest, Taxes, Depreciation, and Amortization – measures core profitability.
Ownership in a company, representing the residual value after deducting liabilities from assets.
Exchange-Traded Fund: a collection of assets like stocks or bonds that trade like a single stock.
Exponential Moving Average gives higher weight to recent prices to identify trend direction.
Tracks the buying/selling activity of Foreign and Domestic Institutional Investors in markets.
Bonds or securities issued by the government, offering low risk and steady returns.
A candlestick with a long upper shadow and small body, suggesting bearish reversal.
A candle with a small body and long lower wick found at market bottoms, indicating reversal.
Similar to a hammer but occurs at the top of an uptrend, signaling a bearish reversal.
The practice of buying and selling the same stock within the same trading day.
From 9:15 AM to 3:30 PM (IST), Monday to Friday – the official intraday trading hours in India.
Companies with large market capitalizations, typically over ₹20,000 crore, are considered stable.
Financial obligations a company owes – includes loans, wages payable, and accounts payable.
The actual worth of a share based on fundamentals like earnings, not current market price.
A bearish-colored hammer candle indicating potential reversal, though less strong than a green hammer.
Tax on profits from assets held over one year. In India, LTCG on equity above ₹1 lakh is taxed at 10%.
MTF (Margin Trading Facility) allows investors to buy shares by paying only a part of the total amount, with the rest funded by the broker.
A strong candlestick with no wicks; a green marubozu signals bullish momentum, red indicates bearish strength.
Official trading holidays for the Multi Commodity Exchange (MCX) in the year 2024.
Companies with medium market capitalization, typically ranging between ₹5,000 to ₹20,000 crore, offering growth potential.
Short-term debt instruments like T-Bills, commercial papers, and certificates of deposit, used for liquidity management.
Stocks that give returns multiple times their cost over time, often due to strong business growth.
NSE stands for National Stock Exchange, one of India’s largest and most active stock exchanges.
NPA stands for Non-Performing Asset, a loan or advance for which the principal or interest is overdue for 90 days or more.
Net Profit = Total Revenue – Total Expenses. It reflects a company’s overall profitability.
Days when the National Stock Exchange is closed for trading, usually due to festivals or national holidays.
The trading of contracts that give the right, but not the obligation, to buy or sell an asset at a set price.
PAN is a unique 10-character alphanumeric ID issued by the Income Tax Department for tax purposes in India.
PEG Ratio = PE Ratio / Earnings Growth Rate. It helps evaluate if a stock is overvalued considering its growth.
A collection of financial assets like stocks, bonds, mutual funds held by an investor or institution.
Price-to-Earnings Ratio = Market Price per Share / Earnings per Share; used to value a stock.
Shares that offer fixed dividends and priority over equity shares in case of liquidation.
Price-to-Book Ratio = Market Price per Share / Book Value per Share. It assesses a company’s valuation.
The primary market enables companies to raise capital by issuing new securities directly to investors.
A sentiment indicator calculated by dividing the number of traded put options by the number of call options.
ROCE stands for Return on Capital Employed, measuring a company's profitability relative to total capital used.
ROE stands for Return on Equity, indicating how efficiently a company generates profit from shareholders' equity.
A bearish chart pattern where prices converge upward, often signaling a potential downward breakout.
SEBI stands for Securities and Exchange Board of India, the regulator of the securities market in India.
SEBI regulates stock markets, protects investor interests, and ensures transparency and fair practices.
Writing (selling) options contracts to earn premiums; risk is high if the market moves against the position.
When a company repurchases its own shares from the market, reducing outstanding shares and potentially increasing value.
Breakdown showing how shares of a company are distributed among promoters, institutions, and public shareholders.
Tax on profits from shares held for less than a year. In India, STCG is taxed at 15%.
SIP (Systematic Investment Plan) allows investors to invest fixed amounts in mutual funds at regular intervals, promoting disciplined investing.
Companies with small market capitalization, typically under ₹5,000 crore, offering high growth but higher risk.
Government-issued bonds linked to gold prices. They offer interest income and eliminate storage risk of physical gold.
A candlestick with a small body and long wicks on both sides, signaling market indecision.
One must register with SEBI, clear relevant exams (like NISM), and get empanelled with stock exchanges like NSE/BSE.
A marketplace where financial instruments like stocks and bonds are traded between buyers and sellers.
A platform where shares of publicly held companies are issued, bought, and sold.
Refers to whether the stock exchanges are open for trading on the current day.
Stock market trading in India is open from 9:15 AM to 3:30 PM (Monday to Friday).
No, the Indian stock market remains closed on Saturdays, Sundays, and official exchange holidays.
In India, stock markets open at 9:15 AM and close at 3:30 PM (IST), Monday to Friday.
Pre-open: 9:00–9:15 AM, Regular: 9:15 AM–3:30 PM, Post-market: 3:40–4:00 PM (IST), Monday to Friday.
Promoters are individuals or groups who start and help grow a company, often holding significant ownership and control.
An order placed to sell a security at a pre-decided price to limit losses in case the market moves unfavorably.
An options strategy involving buying a call and a put at different strike prices to profit from high volatility.
Includes chart patterns, technical indicators (e.g., RSI, MACD), trendlines, support/resistance, and candlestick analysis.
The act of buying and selling financial instruments like stocks or derivatives to earn profits.
Using debt to increase the potential return on equity, also known as financial leverage.
Includes cumulative, non-cumulative, convertible, non-convertible, participating, and non-participating preference shares.
Includes authorized, issued, subscribed, and paid-up share capital.
Stocks trading below their intrinsic value, often considered good long-term investment opportunities.
US markets open at 7:00 PM (IST) during Daylight Saving Time and 8:00 PM (IST) otherwise.
NASDAQ opens at 7:00 PM (IST) in summer and 8:00 PM (IST) in winter (Daylight Saving adjusted).
Shares that accumulate unpaid dividends and pay them out before equity shareholders receive any.
An options strategy where an investor holds a stock and sells a call option to earn premium income.
An account that holds securities like shares in electronic form, eliminating the need for physical certificates.
Financial instruments whose value is derived from an underlying asset like stocks, commodities, or indices.
A candlestick with nearly equal open and close prices, signaling market indecision and potential reversal.
Employee Stock Ownership Plan – allows employees to own shares in the company, aligning interests with business growth.
The nominal or original cost of a share as stated by the issuing company, usually ₹1, ₹2, or ₹10 in India.
Derivative contracts where Futures obligate and Options give the right (not obligation) to buy/sell an asset at a set price in the future.
The extra price investors are willing to pay for an IPO share before its official listing on the stock exchange.
A risk management strategy used to offset potential losses in one investment by taking an opposite position in another.
Implied Volatility (IV) indicates the market’s forecast of a stock’s volatility, affecting option prices.
India VIX (Volatility Index) measures the expected market volatility over the near term; higher value means higher fear.
A general increase in prices of goods and services over time, reducing purchasing power.
IPO stands for Initial Public Offering – the first time a company offers its shares to the public.
Moving Average Convergence Divergence – a momentum indicator that shows the relationship between two EMAs.
MCX stands for Multi Commodity Exchange, India’s leading commodity derivatives exchange.
Nifty is a benchmark stock index representing the top 50 companies listed on the National Stock Exchange (NSE).
Nifty 50 is a broad market index tracking the performance of 50 major NSE-listed companies across sectors.
Simulated trading using virtual money to practice strategies without real financial risk.
Sensex is a stock market index comprising 30 financially strong companies listed on the BSE.
Sensex stands for ‘Sensitive Index,’ representing the 30 top companies on the Bombay Stock Exchange.
An advanced strategy involving selling a call and put at different strike prices, profiting from low volatility.
A pooled investment vehicle that collects money from investors to invest in diversified assets.
A mutual fund is a professionally managed investment scheme that pools money to buy a diversified portfolio of assets.
Mutual funds offer diversification and professional management; stocks are individual company investments with higher control and risk.
A fee charged when investors exit a mutual fund before a specified period, reducing overall returns.
The annual fee charged by mutual funds to manage your money, expressed as a percentage of assets under management.
Gold mutual funds invest in gold ETFs or related instruments and offer an alternative to physical gold investment.
Long Term Capital Gains on equity mutual funds are taxed at 10% if gains exceed ₹1 lakh in a financial year.
A one-time investment in a mutual fund scheme, as opposed to investing through SIPs.
XIRR (Extended Internal Rate of Return) calculates the annualized returns of irregular cash flows like SIPs or SWPs.
SIP stands for Systematic Investment Plan – a method of investing in mutual funds at regular intervals.
STP (Systematic Transfer Plan) allows transferring a fixed amount from one mutual fund scheme to another periodically.
SWP (Systematic Withdrawal Plan) allows investors to withdraw a fixed amount regularly from their mutual fund investments.
Refers to the principles and laws governing the collection of revenue (taxes) by the government on income, profits, etc.
