1. Basic KYC Terms
KYC (Know Your Customer) – The process by which financial institutions verify the identity of clients to prevent fraud, money laundering, and financial crimes.
KRA (KYC Registration Agency) – Entities that maintain KYC records of investors and facilitate a unified KYC process across financial markets.
CKYC (Central KYC Registry) – A centralized system under the control of CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India) that maintains a single KYC record for multiple financial transactions.
eKYC (Electronic KYC) – A paperless KYC verification process using Aadhaar-based authentication.
Aadhaar-based KYC – KYC done using the Aadhaar number, either through OTP authentication or biometric verification.
PAN-based KYC – KYC done using the Permanent Account Number (PAN) as the primary identifier.
2. KYC Process & Compliance
In-Person Verification (IPV) – A mandatory process where an investor’s identity is verified physically or via video KYC.
Video KYC (VKYC) – A digital method for verifying customer identity through a live video call with a KYC officer.
KYC Status – Indicates whether an investor’s KYC is registered, pending, or rejected in the system.
Re-KYC / Periodic KYC Update – The process of updating KYC details periodically as mandated by regulatory authorities.
KYC Rejection – When the submitted documents are incomplete or incorrect, leading to rejection by KRAs.
3. Key Entities & Institutions
SEBI (Securities and Exchange Board of India) – The regulatory body overseeing KYC compliance for capital markets.
RBI (Reserve Bank of India) – The regulator for banks and NBFCs, ensuring compliance with KYC norms.
IRDAI (Insurance Regulatory and Development Authority of India) – Regulates KYC requirements in the insurance sector.
FIU-IND (Financial Intelligence Unit – India) – Monitors and analyzes financial transactions for money laundering and fraud.
AMFI (Association of Mutual Funds in India) – An industry body ensuring KYC compliance for mutual funds.
UIDAI (Unique Identification Authority of India) – The entity responsible for issuing Aadhaar, often used in eKYC.
4. Types of KYC Accounts
Full KYC Account – A fully verified account allowing unrestricted financial transactions.
Limited KYC Account – A temporary account with transaction restrictions until full KYC is completed.
Non-KYC Compliant Account – Accounts that do not meet regulatory KYC requirements and are subject to restrictions or suspension.
5. KYC & AML (Anti-Money Laundering) Compliance
AML (Anti-Money Laundering) – Regulations that require financial institutions to prevent, detect, and report money laundering activities.
PEP (Politically Exposed Person) – A high-risk category of clients due to their political connections, requiring enhanced due diligence.
CDD (Customer Due Diligence) – The process of verifying the identity and risk profile of a customer.
EDD (Enhanced Due Diligence) – Additional scrutiny applied to high-risk customers (e.g., PEPs, large transactions).
Sanctions Screening – Checking customers against global watchlists like OFAC, UN, EU sanctions lists.
6. KYC in Different Financial Sectors
Stock Market KYC – Required for opening a Demat Account and trading in stocks.
Mutual Fund KYC – Mandatory for investing in mutual funds, verified by KRAs.
Bank KYC – Needed for opening savings accounts, current accounts, fixed deposits, etc.
NBFC & Fintech KYC – Required for availing loans, digital wallets, and financial services.
Crypto KYC – As per FIU-IND and RBI guidelines, crypto exchanges must verify customer identities before allowing transactions.
Here are some key trading and Demat account-related jargons used in the Indian stock markets, along with their explanations and examples:
A. Trading Account Related Jargons
Brokerage
The commission charged by the stockbroker for executing buy/sell orders.
Example: If you buy shares worth ₹10,000 and the brokerage is 0.5%, you will pay ₹50 as brokerage.
Margin Trading
Buying stocks by borrowing funds from the broker. This allows investors to buy more than their available capital.
Example: If you have ₹10,000 but want to buy shares worth ₹20,000, the broker funds the remaining ₹10,000.
MIS (Margin Intraday Square-off)
A facility for intraday trading where positions are squared off before market close.
Example: If you buy 100 shares at ₹50 in MIS mode, you must sell them before the market closes.
CNC (Cash and Carry)
Used for delivery-based trades where shares are held in the Demat account.
Example: If you buy shares of Tata Motors under CNC, they get credited to your Demat account.
F&O (Futures and Options)
Derivatives trading where investors can buy/sell contracts instead of actual shares.
Example: A Reliance 2800 CE (Call Option) means an investor has the right to buy Reliance shares at ₹2800.
Stop Loss (SL) & Stop Loss Market (SL-M)
A predefined price set to minimize losses on a trade.
Example: If you buy a stock at ₹100 and set SL at ₹95, the stock will be sold automatically if it falls to ₹95.
Limit Order & Market Order
Limit Order: Buy/Sell a stock at a specific price.
Market Order: Buy/Sell a stock at the current market price.
Example: If Tata Steel is trading at ₹125, a Limit Order at ₹120 will execute only if the price drops to ₹120.
LTP (Last Traded Price)
The most recent price at which the stock was traded.
Example: If Infosys’ last trade happened at ₹1450, then LTP is ₹1450.
Circuit Limit (Upper/Lower Circuit)
The maximum percentage a stock can rise or fall in a day.
Example: If a stock has a 10% circuit limit, it can only rise/fall by 10% in a single day.
Square Off
Closing an open intraday position before the market closes.
Example: If you buy 100 shares of HDFC Bank at ₹1,500 in intraday, you must sell them before market close.
B. Demat Account Related Jargons
Demat Account
An account where shares and securities are held in electronic form.
Example: If you buy 10 shares of TCS, they are stored in your Demat account.
Depository (NSDL & CDSL)
Organizations that hold shares electronically.
Example: If you have a Zerodha account, your shares are stored in CDSL.
DP (Depository Participant)
A registered broker or financial institution offering Demat services.
Example: Zerodha, Upstox, ICICI Direct, HDFC Securities are DPs.
ISIN (International Securities Identification Number)
A unique number assigned to each stock.
Example: ISIN of Reliance Industries is INE002A01018.
Pledge & Unpledge
Using shares as collateral to borrow money for trading.
Example: If you pledge ₹1 lakh worth of stocks, the broker gives margin money.
BO ID (Beneficiary Owner ID)
A unique 16-digit ID assigned to every Demat account holder.
Example: 1234567890123456 (Unique to each investor).
Power of Attorney (PoA)
A legal document allowing a broker to debit shares from your Demat account when selling.
Example: Zerodha asks for an e-DIS or PoA to sell stocks.
Settlement Cycle (T+1)
The time taken for shares to be credited to the Demat account after buying.
Example: If you buy shares on Monday, they will be credited to your Demat account on Tuesday (T+1).
Corporate Actions (Bonus, Dividend, Rights Issue)
Events affecting shareholders, like dividend payout, bonus shares, and rights issues.
Example: If TCS declares a dividend of ₹20 per share, it is credited to your bank account.
Nominee in Demat Account
The person who will inherit your shares in case of death.
Example: You can add your spouse, child, or parent as a nominee.
Types of Accounts in the Indian Stock Market
Demat Account
Trading Account
Commodity Trading Account
Margin Trading Facility (MTF) Account
Foreign Portfolio Investment (FPI) Account
Non-Resident Indian (NRI) Accounts
NRE (Non-Resident External) Account
NRO (Non-Resident Ordinary) Account
1. Demat Account (Dematerialized Account)
Use Case:
Holds securities (stocks, bonds, mutual funds, ETFs) in electronic form.
Essential for trading and investing in the stock market.
Charges:
Account Opening Charges: ₹0 to ₹1,000 (varies by broker).
Annual Maintenance Charges (AMC): ₹300 to ₹1,000 per year.
Transaction Charges: ₹10 to ₹25 per debit transaction.
Dematerialization Charges: ₹5 to ₹50 per certificate.
Terms & Conditions:
Required to link with a trading account.
Securities are stored electronically in CDSL/NSDL.
Charges may vary based on the broker.
Advantages:
Safe and secure way to hold stocks.
No risk of physical damage or loss.
Enables easy trading.
Disadvantages:
Involves maintenance charges.
Selling of shares attracts transaction fees.
Taxation:
Capital Gains Tax applies when selling securities:
Short-Term Capital Gains (STCG): 15% if sold within one year.
Long-Term Capital Gains (LTCG): 10% on gains above ₹1 lakh per year.
2. Trading Account
Use Case:
Required for buying and selling securities in the stock market.
Acts as a bridge between the Demat account and bank account.
Charges:
Account Opening Charges: ₹0 to ₹500.
Brokerage Charges:
Discount brokers: 0.01% or ₹10-20 per order.
Full-service brokers: 0.1% to 0.5% per trade.
STT (Securities Transaction Tax): 0.1% on buy/sell of equities.
Terms & Conditions:
Must be linked with a bank account and Demat account.
Brokerage varies across brokers.
Advantages:
Facilitates online buying/selling of shares.
Quick execution of trades.
Disadvantages:
Brokerage fees and transaction charges apply.
Taxation:
STT applies on every trade.
Capital gains tax on profit from trades.
3. Commodity Trading Account
Use Case:
Used to trade in commodities like gold, silver, crude oil, and agricultural products.
Operates through commodity exchanges like MCX & NCDEX.
Charges:
Account Opening Charges: ₹0 to ₹500.
Brokerage Charges: 0.05% to 0.3% per trade.
Exchange Transaction Charges: ₹3-5 per ₹1 lakh.
Terms & Conditions:
Requires linking with a trading and bank account.
Different margin requirements for commodities.
Advantages:
Allows diversification into commodities.
Can hedge against inflation.
Disadvantages:
Higher margin requirements.
Price volatility risk.
Taxation:
Profits are taxed as business income or capital gains.
STT does not apply, but Commodity Transaction Tax (CTT) applies.
4. Margin Trading Facility (MTF) Account
Use Case:
Enables traders to buy stocks with borrowed money from the broker.
Charges:
Interest Charges: 12% to 24% per annum.
Brokerage Charges: Higher than normal trading accounts.
Terms & Conditions:
Margin calls apply if stocks lose value.
Stocks bought on margin act as collateral.
Advantages:
Allows higher exposure to stocks with limited capital.
Disadvantages:
High risk of losses.
Interest on borrowed funds increases costs.
Taxation:
Short-term capital gains (15%) if sold within a year.
Long-term capital gains (10%) if gains exceed ₹1 lakh.
5. Foreign Portfolio Investment (FPI) Account
Use Case:
Used by foreign investors to invest in Indian equities, debt, and derivatives.
Charges:
FPI Registration Fees: ₹5,000 to ₹25,000.
Transaction & Compliance Costs: Varies.
Terms & Conditions:
Must be registered with SEBI.
Complies with FEMA regulations.
Advantages:
Foreign investors can participate in Indian markets.
Disadvantages:
Regulatory compliance is complex.
Taxation:
STCG at 15% and LTCG at 10%.
Withholding tax may apply.
6. NRI Trading Accounts
(For Non-Resident Indians) There are two types:
NRE (Non-Resident External) Trading Account - Used for trading in equity.
NRO (Non-Resident Ordinary) Trading Account - Used for trading in both equity and derivatives.
Use Case:
Enables NRIs to invest in the Indian stock market.
Charges:
Account Opening Charges: ₹500 to ₹2,000.
Brokerage Charges: 0.5% to 1% per trade.
Terms & Conditions:
Requires approval under PIS (Portfolio Investment Scheme).
Cannot engage in intraday trading.
Advantages:
Allows NRIs to invest in Indian stocks.
Repatriation of profits possible with NRE accounts.
Disadvantages:
Regulatory restrictions on certain stocks.
No intraday trading allowed.
Taxation:
STCG at 15% and LTCG at 10%.
TDS (Tax Deducted at Source) applies before repatriation.
Fundamental and Technical Jargons in Finance and Trading
In finance and trading, two primary types of analysis are used to evaluate securities: fundamental analysis and technical analysis. Each has its own set of jargon and key terms.
1. Fundamental Analysis Jargons
Fundamental analysis involves evaluating a company's intrinsic value by examining financial statements, management, industry trends, and macroeconomic factors.
Company Financials
Revenue (Top Line) – Total income generated by a company before expenses.
Net Income (Bottom Line) – Profit remaining after all expenses, including taxes.
EPS (Earnings Per Share) – Profit allocated to each outstanding share.
P/E Ratio (Price-to-Earnings Ratio) – Stock price divided by EPS; measures valuation.
PEG Ratio – P/E ratio adjusted for earnings growth.
Book Value – The net asset value of a company (assets - liabilities).
ROE (Return on Equity) – Net income divided by shareholder equity; measures profitability.
ROA (Return on Assets) – Net income divided by total assets; shows efficiency.
ROIC (Return on Invested Capital) – Profitability metric considering debt and equity.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) – Measures profitability without accounting for capital structure and tax effects.
FCF (Free Cash Flow) – Cash left after capital expenditures; used for growth, dividends, or debt reduction.
Stock Valuation
Intrinsic Value – The real worth of a stock based on future cash flows.
Dividend Yield – Annual dividend divided by stock price; shows return from dividends.
P/B Ratio (Price-to-Book Ratio) – Compares stock price to book value per share.
DCF (Discounted Cash Flow) – A valuation method based on future cash flow projections.
Beta – Measures stock volatility relative to the market.
Macroeconomic Indicators
GDP (Gross Domestic Product) – The total value of goods and services in an economy.
Inflation – The rate at which the general price level of goods and services rises.
Interest Rates – The cost of borrowing money, set by central banks.
Unemployment Rate – Percentage of the labor force that is jobless and seeking employment.
CPI (Consumer Price Index) – Measures inflation based on a basket of goods.
PMI (Purchasing Managers’ Index) – An indicator of manufacturing and service sector activity.
2. Technical Analysis Jargons
Technical analysis focuses on price movements and trading volume, using charts and indicators to predict future price action.
Chart Patterns
Support – A price level where buying interest prevents further decline.
Resistance – A price level where selling interest prevents further rise.
Breakout – When price moves beyond resistance or support.
Head and Shoulders – A reversal pattern indicating a trend change.
Double Top/Bottom – A pattern signaling trend reversal.
Trendline – A line connecting price highs or lows to show the trend.
Consolidation – A period of sideways price movement before a breakout.
Gaps – Price areas on a chart where no trading occurred.
Candlestick Patterns
Doji – A candlestick with a small body, indicating indecision.
Hammer – A bullish reversal pattern at the bottom of a downtrend.
Shooting Star – A bearish reversal pattern at the top of an uptrend.
Engulfing Pattern – A strong reversal signal where a larger candle engulfs the previous one.
Morning Star / Evening Star – Three-candle reversal patterns.
Marubozu – A strong trend candle without wicks.
Technical Indicators
Moving Averages (MA) – A trend-following indicator smoothing price action.
SMA (Simple Moving Average) – Average price over a specific period.
EMA (Exponential Moving Average) – A weighted average giving more importance to recent data.
MACD (Moving Average Convergence Divergence) – Measures momentum and trend strength.
RSI (Relative Strength Index) – A momentum oscillator measuring overbought/oversold conditions.
Bollinger Bands – Volatility bands around a moving average.
Stochastic Oscillator – Measures momentum and overbought/oversold levels.
Fibonacci Retracement – Predicts potential support/resistance levels based on Fibonacci ratios.
VWAP (Volume Weighted Average Price) – The average price weighted by volume.
ADX (Average Directional Index) – Measures trend strength.
ATR (Average True Range) – Measures volatility.
Parabolic SAR – A trend-following indicator showing potential reversal points.
Trading Strategies and Terms
Bullish – Expecting prices to rise.
Bearish – Expecting prices to fall.
Long Position – Buying an asset expecting it to increase in value.
Short Position (Short Selling) – Selling an asset expecting it to decrease in value.
Stop-Loss – A predetermined price level to limit losses.
Take Profit – A predetermined price level to secure profits.
Risk-Reward Ratio – The ratio of potential profit vs. risk taken.
Scalping – A trading strategy aiming for small profits in short time frames.
Day Trading – Buying and selling within a single trading day.
Swing Trading – Holding positions for days or weeks to profit from short-term trends.
Position Trading – Holding positions for weeks to months based on long-term trends.
Momentum Trading – Buying stocks with strong trends.
Breakout Trading – Entering trades when price breaks key levels.
Reversal Trading – Entering trades when trend direction changes.
In the Indian stock market, regulatory bodies such as SEBI (Securities and Exchange Board of India) and exchanges like NSE (National Stock Exchange) & BSE (Bombay Stock Exchange) use specific jargon to regulate and manage the market efficiently. Here are some key regulatory stock market-related terms:
1. Regulatory Bodies & Entities
SEBI (Securities and Exchange Board of India) – The regulatory authority overseeing securities markets in India.
RBI (Reserve Bank of India) – Regulates monetary policy, including interest rates affecting stock markets.
IRDAI (Insurance Regulatory and Development Authority of India) – Regulates insurance companies that participate in the stock market.
PFRDA (Pension Fund Regulatory and Development Authority) – Regulates pension funds investing in equity markets.
Depositories (NSDL & CDSL) – Hold securities in electronic form and facilitate transactions.
Stock Exchanges (NSE & BSE) – Marketplaces for buying and selling securities.
Clearing Corporation (CCIL, ICCL, NSE Clearing Ltd.) – Ensures settlement of trades in stock, currency, and derivatives markets.
2. Trading & Market Regulations
KYC (Know Your Customer) – A mandatory verification process for investors.
PAN (Permanent Account Number) – Required for trading in Indian stock markets.
Brokerage & DP Charges – Fees charged by brokers and depository participants.
Margin Trading – Trading with borrowed funds, regulated by SEBI.
Upper & Lower Circuit – The maximum percentage a stock price can move in a day, set by SEBI to prevent excessive volatility.
Circuit Breakers – Market-wide regulatory limits that halt trading for a specified time if indices hit a threshold.
Short Selling – Selling borrowed shares with the intent to buy them back later; regulated by SEBI.
NSE’s SLB (Stock Lending and Borrowing) – A mechanism allowing investors to lend/borrow securities.
3. Listing & Compliance Regulations
IPO (Initial Public Offering) – The process by which a private company becomes public by issuing shares.
FPO (Follow-on Public Offering) – When an already listed company issues new shares to the public.
DRHP (Draft Red Herring Prospectus) – A document submitted by companies before an IPO.
LTP (Last Traded Price) – The last recorded transaction price of a stock.
XBRL (Extensible Business Reporting Language) – A format for financial reporting compliance.
Delisting – The removal of a stock from an exchange, either voluntarily or due to non-compliance.
4. Insider Trading & Market Surveillance
Insider Trading – Buying or selling shares based on unpublished price-sensitive information; strictly regulated.
Front Running – Illegal practice where brokers trade on advance information before executing client orders.
Price Rigging – Manipulating stock prices by artificially inflating or deflating demand.
PMS (Portfolio Management Services) – A SEBI-regulated investment service for high-net-worth individuals.
Algo Trading (Algorithmic Trading) – Automated trading based on pre-defined rules, monitored by SEBI.
5. Foreign Investments & Institutional Regulations
FPI (Foreign Portfolio Investors) – Investors from outside India investing in stocks and bonds.
FII (Foreign Institutional Investors) – Large international investors in Indian markets, now included in FPIs.
QIB (Qualified Institutional Buyer) – Institutional investors like mutual funds, insurance companies, and banks eligible for certain securities.
FDI (Foreign Direct Investment) – Direct investment in Indian companies by foreign entities.
ODI (Overseas Direct Investment) – Indian companies investing in foreign firms.
6. Taxation & Financial Reporting
STT (Securities Transaction Tax) – A tax levied on stock transactions in India.
LTCG (Long-Term Capital Gains Tax) – Tax on gains from stocks held for more than a year (10% for gains above ₹1 lakh).
STCG (Short-Term Capital Gains Tax) – Tax on gains from stocks held for less than a year (15%).
Dividend Distribution Tax (DDT) [Abolished] – Earlier tax levied on dividends, now taxed in investors’ hands.
GST on Brokerage – Goods & Services Tax applicable to stock trading services.
7. Derivatives & Risk Management
Futures & Options (F&O) – Derivatives contracts regulated by SEBI and traded on NSE/BSE.
SPAN Margin – A risk-based margining system for derivatives trading.
VAR (Value at Risk) – A method to measure market risk exposure.
Mark-to-Market (MTM) – Adjusting the value of open positions based on daily market price movements.
Open Interest – The number of outstanding contracts in futures/options.
8. Mutual Funds & Investment Schemes
SIP (Systematic Investment Plan) – A method of investing in mutual funds at regular intervals.
NAV (Net Asset Value) – The per-unit value of a mutual fund scheme.
ELSS (Equity Linked Savings Scheme) – A tax-saving mutual fund scheme.
NFO (New Fund Offer) – The first-time subscription offer of a mutual fund scheme.
AIF (Alternative Investment Fund) – SEBI-regulated funds that invest in non-traditional assets.
9. Corporate Governance & ESG Regulations
Corporate Governance Norms – SEBI’s rules for transparency in listed companies.
ESG (Environmental, Social, and Governance) Compliance – SEBI’s regulatory framework for sustainable investing.
AGM (Annual General Meeting) – A mandatory meeting for shareholders of listed companies.
10. RBI & Monetary Policy Impact
Repo Rate & Reverse Repo Rate – Interest rates affecting liquidity in markets.
CRR (Cash Reserve Ratio) – A percentage of a bank’s funds that must be held with the RBI.
SLR (Statutory Liquidity Ratio) – A minimum percentage of net demand and time liabilities banks must maintain.
Corporate Actions Jargon in Indian Markets
Corporate actions are events initiated by a company that affect its stakeholders, including shareholders, bondholders, and employees. In the Indian stock market, corporate actions can be classified into mandatory, optional, and voluntary actions. Below are key corporate action jargons relevant to the Indian markets:
1. Dividend-related Corporate Actions
Interim Dividend – A dividend declared and paid before the company’s annual earnings are finalized.
Final Dividend – Declared at the Annual General Meeting (AGM) after the company finalizes its annual earnings.
Special Dividend – A one-time dividend that a company pays, usually from surplus earnings.
Dividend Yield – A financial ratio that shows how much dividend a company pays relative to its stock price.
Ex-Dividend Date – The date on or after which a stock trades without the dividend; investors purchasing shares on this date or later will not be eligible for the declared dividend.
Record Date – The date set by the company to determine which shareholders are eligible for the declared dividend.
Dividend Payout Ratio – The percentage of earnings distributed as dividends.
2. Share Capital-Related Actions
Bonus Issue (Bonus Shares) – Free additional shares issued to existing shareholders based on the number of shares they hold.
Rights Issue – A way for companies to raise capital by offering existing shareholders the right to buy additional shares at a discounted price.
Preferential Allotment – Issuance of shares to a specific group, like promoters or institutional investors, at a fixed price.
Follow-on Public Offer (FPO) – When a listed company issues additional shares to raise capital.
Private Placement – The sale of securities to a select group of investors rather than through a public offering.
3. Stock Market-Related Actions
Stock Split – A corporate action where a company increases the number of shares while reducing the face value proportionately (e.g., 1:5 split means one share is split into five).
Reverse Stock Split (Share Consolidation) – A reduction in the number of shares with an increase in face value to boost the stock price.
Buyback (Share Repurchase) – When a company repurchases its own shares to reduce the total outstanding stock and improve shareholder value.
Delisting – The removal of a company’s shares from the stock exchange, making it a privately held entity.
Re-listing – A previously delisted company returning to the stock exchange.
4. Mergers, Acquisitions & Restructuring
Merger – Two or more companies combine to form a new entity.
Demerger (Spin-off or Split-off) – When a company splits a portion of its business into a separate entity.
Acquisition – When one company takes over another.
Open Offer – When an acquiring company makes an offer to buy shares from the public, usually after crossing a certain shareholding threshold.
Takeover Code (SEBI SAST Regulations) – A set of regulations by SEBI governing takeovers and acquisitions of listed companies.
5. Debt & Other Instruments
Debenture – A type of debt instrument that is not backed by collateral but relies on the issuer’s creditworthiness.
Convertible Debentures – Bonds or debentures that can be converted into equity shares after a certain period.
Non-Convertible Debentures (NCDs) – Fixed-income instruments that cannot be converted into equity.
Warrants – A derivative that gives the holder the right (but not obligation) to buy a company's stock at a fixed price within a certain timeframe.
Perpetual Bonds – Bonds with no maturity date, often issued by banks and financial institutions.
Callable Bonds – Bonds that the issuer can redeem before maturity.
Puttable Bonds – Bonds that the holder can sell back to the issuer before maturity.
6. Regulatory & Compliance Terms
SEBI (Securities and Exchange Board of India) – The regulatory body governing stock markets in India.
Listing Obligations & Disclosure Requirements (LODR) – SEBI regulations that ensure transparency in corporate actions.
Insider Trading – Buying or selling securities based on non-public information.
ESOP (Employee Stock Option Plan) – A scheme that gives employees the right to buy company shares at a fixed price.
QIP (Qualified Institutional Placement) – A way for listed companies to raise capital from institutional investors without extensive regulatory requirements.
IPO (Initial Public Offering) – The first time a company issues shares to the public to get listed on a stock exchange.
7. Other Important Terms
Market Capitalization (Market Cap) – The total value of a company’s outstanding shares (Share Price × Total Shares).
Face Value (Par Value) – The nominal value of a share as stated by the issuing company.
Book Value – The net asset value of a company per share.
Enterprise Value (EV) – The total value of a company, including debt and equity.
Free Float Market Cap – The market cap based on publicly traded shares (excluding promoter holdings).
Languages of the Market
Basic Terms
Stock – A share in the ownership of a company.
Example: Buying 10 shares of TCS means you own a small portion of TCS.Share – Unit of ownership in a company.
Example: If Infosys has 100 shares and you own 10, you own 10% of the company.Equity – Ownership in a company through shares.
Example: Investing in Reliance Industries means buying equity in the company.IPO (Initial Public Offering) – When a company first sells its shares to the public.
Example: Zomato launched its IPO in 2021.FPO (Follow-on Public Offering) – When a listed company issues new shares.
Example: Adani Enterprises issued an FPO in 2023.Bonus Shares – Free additional shares given to shareholders.
Example: A company announces a 1:1 bonus, so if you have 100 shares, you get 100 more.Rights Issue – Existing shareholders get a chance to buy additional shares at a discount.
Example: Tata Motors offered a rights issue in 2021.Face Value – The original cost of a stock.
Example: A stock with a face value of ₹10 may trade at ₹500 in the market.Market Price – The current trading price of a stock.
Example: The market price of HDFC Bank is ₹1,500 today.Market Capitalization – Total value of a company’s shares.
Formula: Market Cap = Market Price × Total SharesLarge-Cap Stocks – Companies with a high market cap (₹20,000+ crore).
Example: Reliance, TCS, HDFC Bank.Mid-Cap Stocks – Companies with a market cap of ₹5,000-₹20,000 crore.
Example: Mphasis, Tata Power.Small-Cap Stocks – Companies with a market cap below ₹5,000 crore.
Example: RattanIndia Power, Vikas Ecotech.Dividend – Profit distributed to shareholders.
Example: ITC announced a ₹10 dividend per share.Ex-Dividend Date – The last date to be eligible for dividends.
Record Date – The date on which the company checks its records to distribute dividends.
Stock Split – Dividing one share into multiple shares.
Example: A 1:5 stock split turns 1 share of ₹1,000 into 5 shares of ₹200 each.Buyback – A company repurchasing its own shares.
Example: Infosys announced a buyback at ₹1,850 per share.Nifty 50 – The top 50 stocks in NSE.
Sensex – The top 30 stocks in BSE.
BSE (Bombay Stock Exchange) – The oldest stock exchange in India.
NSE (National Stock Exchange) – The largest stock exchange in India.
SEBI (Securities and Exchange Board of India) – Regulates the stock market.
Bull Market – A rising market trend.
Bear Market – A falling market trend.
Correction – A temporary decline of 10%+ in the stock market.
Circuit Limit – Maximum price movement allowed in a day.
Upper Circuit – The highest price a stock can go in a day.
Lower Circuit – The lowest price a stock can fall in a day.
Volatility – The degree of price fluctuations in stocks.
Liquidity – How easily a stock can be bought/sold.
Order Book – A list of buy and sell orders in the market.
Bid Price – The highest price a buyer is willing to pay.
Ask Price – The lowest price a seller is willing to accept.
Spread – The difference between bid and ask prices.
Market Order – Buying/selling at the current market price.
Limit Order – Setting a specific price for buying/selling.
Stop-Loss Order – Automatically selling at a pre-decided price to prevent losses.
Intraday Trading – Buying and selling stocks within the same day.
Delivery Trading – Buying stocks and holding them for the long term.
Derivatives – Financial contracts whose value is derived from an underlying asset.
Futures Contract – An agreement to buy/sell stocks at a future date.
Options Contract – The right (not obligation) to buy/sell a stock at a predetermined price.
Call Option – The right to buy a stock at a fixed price.
Put Option – The right to sell a stock at a fixed price.
Strike Price – The fixed price in an options contract.
Premium – The cost of buying an option.
Open Interest – The total number of outstanding futures/options contracts.
Hedging – Reducing risk using derivatives.
Arbitrage – Profiting from price differences in different markets.
Advanced Stock Market Terms
Short Selling – Selling shares first and buying later at a lower price.
Margin Trading – Borrowing money from brokers to trade.
Leverage – Using borrowed funds to trade.
Penny Stocks – Very low-priced stocks with high risk.
Blue-Chip Stocks – Stocks of financially stable companies.
Fundamental Analysis – Evaluating a stock based on company financials.
Technical Analysis – Predicting stock movements based on charts.
Support Level – A price level where buying is strong.
Resistance Level – A price level where selling is strong.
RSI (Relative Strength Index) – Measures stock momentum.
MACD (Moving Average Convergence Divergence) – A trend-following indicator.
PE Ratio (Price-to-Earnings Ratio) – Market price per share ÷ Earnings per share.
EPS (Earnings Per Share) – Net profit ÷ Total shares.
Debt-to-Equity Ratio – Measures a company’s debt against its equity.
ROE (Return on Equity) – Net income ÷ Shareholder equity.
Dividend Yield – Dividend per share ÷ Market price per share.
NAV (Net Asset Value) – Used in mutual funds.
Stock Beta – Measures stock volatility.
Insider Trading – Illegal trading based on confidential information.
Algo Trading – Automated trading using algorithms.
Trading & Investment Strategies
Portfolio – A collection of investments owned by an individual or institution.
Example: A portfolio consisting of stocks from Infosys, TCS, and HDFC Bank.Diversification – Investing in multiple assets to reduce risk.
Example: Spreading investments across stocks, gold, and bonds.Asset Allocation – Distributing investments across different asset classes.
Example: 60% in equities, 30% in debt, 10% in gold.Buy and Hold Strategy – Long-term investment strategy.
Value Investing – Buying undervalued stocks based on fundamentals.
Example: Warren Buffett's strategy.Growth Investing – Investing in companies with high growth potential.
Example: Investing in emerging sectors like EVs.Momentum Investing – Buying stocks that are rising and selling those that are falling.
Swing Trading – Holding stocks for a few days to weeks.
Position Trading – Holding stocks for weeks to months.
Scalping – Very short-term trading, often within minutes.
Contrarian Investing – Buying stocks when others are fearful and selling when they are greedy.
Sector Rotation – Moving investments between sectors based on market cycles.
Mean Reversion – The assumption that stock prices will return to their historical average.
Dividend Investing – Investing in high-dividend-yield stocks.
Pyramiding – Adding more shares to a winning trade.
Averaging Down – Buying more shares when the price falls to lower the average cost.
Overbought Stock – A stock that has risen too fast and may fall soon.
Oversold Stock – A stock that has fallen too much and may rise soon.
Market Sentiment – The overall mood of investors (bullish or bearish).
Fear & Greed Index – Measures market emotions.
Market Cycle – Phases of the stock market: expansion, peak, contraction, and trough.
Liquidity Trap – When low interest rates fail to stimulate economic growth.
Bubble – An asset is overvalued and prices rise irrationally.
Market Crash – A sharp decline in stock prices.
Dead Cat Bounce – A temporary recovery in a falling market before further decline.
Pump and Dump – Artificially inflating stock prices and then selling at a high price.
Bear Trap – A false signal that a stock will decline, tricking traders into selling.
Bull Trap – A false signal that a stock will rise, tricking traders into buying.
Double Top Pattern – A bearish reversal pattern in technical analysis.
Double Bottom Pattern – A bullish reversal pattern.
Head and Shoulders Pattern – A technical pattern indicating a trend reversal.
Cup and Handle Pattern – A bullish pattern indicating potential upward movement.
Golden Cross – When the short-term moving average crosses above the long-term moving average (bullish sign).
Death Cross – When the short-term moving average crosses below the long-term moving average (bearish sign).
Breakout – When a stock moves beyond a resistance level.
Breakdown – When a stock falls below a support level.
Fibonacci Retracement – A technical indicator used to find support and resistance levels.
Stop Hunting – Large traders pushing stock prices to trigger stop-loss orders.
VWAP (Volume Weighted Average Price) – Measures the average trading price based on volume.
Dark Pools – Private exchanges where institutional investors trade large volumes.
HFT (High-Frequency Trading) – Automated trading done at high speeds.
Smart Money – Investments made by institutional investors.
Retail Investors – Individual investors trading in the stock market.
Institutional Investors – Large financial organizations investing in markets.
Foreign Institutional Investors (FII) – Foreign entities investing in Indian markets.
Domestic Institutional Investors (DII) – Indian financial institutions investing in the stock market.
Block Deal – A single trade of a large number of shares.
Bulk Deal – Multiple trades totaling a large number of shares.
Round Lot – The standard trading unit of shares.
Odd Lot – A trade involving an irregular number of shares.
Macroeconomic & Miscellaneous Terms
Inflation – The rate at which the general price level of goods and services rises.
Deflation – A decrease in the general price level of goods and services.
GDP (Gross Domestic Product) – The total value of goods and services produced in a country.
Fiscal Deficit – The difference between government spending and revenue.
Current Account Deficit – When a country imports more goods/services than it exports.
Monetary Policy – Actions by RBI to control money supply and interest rates.
Repo Rate – The rate at which RBI lends to commercial banks.
Reverse Repo Rate – The rate at which banks deposit money with RBI.
CRR (Cash Reserve Ratio) – The percentage of total deposits that banks must keep with RBI.
SLR (Statutory Liquidity Ratio) – The minimum percentage of a bank’s net demand and time liabilities kept in cash or liquid assets.
LAF (Liquidity Adjustment Facility) – A tool used by RBI to manage liquidity in the banking system.
NPA (Non-Performing Asset) – A loan that has not been repaid for 90+ days.
Yield Curve – A graph showing bond yields at different maturities.
Bond – A fixed-income security representing a loan made by an investor to a borrower.
Corporate Bond – A bond issued by a company.
Sovereign Bond – A bond issued by the government.
Credit Rating – A measure of the creditworthiness of an entity.
AAA Rating – The highest credit rating indicating low default risk.
Junk Bond – A high-risk bond with a low credit rating.
Hedge Fund – A pooled investment fund that employs high-risk strategies.
SIP (Systematic Investment Plan) – Investing a fixed amount regularly in mutual funds.
ETF (Exchange Traded Fund) – A market-traded fund that tracks an index.
Index Fund – A mutual fund that replicates a stock index.
NAV (Net Asset Value) – The value of a mutual fund unit.
Alpha – The excess return generated by an investment.
Beta – A measure of stock volatility.
Sharpe Ratio – A measure of risk-adjusted return.
Sortino Ratio – Similar to the Sharpe Ratio but considers only downside risk.
Corporate Action – Any event that affects shareholders (dividends, stock splits, etc.).
Merger – Combining two companies into one.
Acquisition – One company purchasing another.
Hostile Takeover – An acquisition done against the wishes of the target company.
Delisting – When a stock is removed from the exchange.
Insider Ownership – Percentage of a company’s shares owned by its management.
Algorithmic Trading – Trading based on pre-defined computer programs.
Penny Stock Manipulation – Pump-and-dump schemes in low-priced stocks.
Speculation – High-risk trading for potential high returns.
Day Trading Margin – Borrowed funds for intraday trading.
Stock Market Index Rebalancing – Changes made in index constituents.
Circuit Breaker – A mechanism to stop extreme market movements.
Black Swan Event – A rare, unpredictable event with severe consequences.
FIIs Buying & Selling Data – Tracks foreign investment inflows/outflows.
Bear Raid – Short-selling stocks to push prices down.
Demat Account – A digital account to hold stocks.
Trading Account – An account used to buy and sell stocks.
Clearing House – Entity ensuring trade settlements.
Settlement Cycle – The time taken to settle a trade (T+1 in India).
Stock Market Holidays – Days when the stock exchange is closed.
T+1 Settlement – Trade settlement completed the next day.
Bull Run – A prolonged period of rising stock prices.