The Language of the Markets

The Language of the Markets: A Complete Glossary for Investors in India

1. Basic KYC Terms

  • KYC (Know Your Customer): Process of verifying the identity of financial clients to prevent illegal activities.
  • KRA (KYC Registration Agency): Maintains investor KYC records across financial platforms.
  • CKYC: Centralized KYC managed by CERSAI, applicable across financial services.
  • eKYC: Aadhaar-based electronic KYC verification.
  • PAN-based KYC: Uses PAN card to verify customer identity.

2. KYC Compliance Process

  • IPV (In-Person Verification): Physical or video verification of investor identity.
  • Video KYC: Online live verification through a video call.
  • KYC Status: Indicates registration, pending, or rejection of KYC.
  • Re-KYC: Periodic updates required to keep investor details valid.
  • KYC Rejection: Occurs when documents are invalid or incomplete.

3. Regulatory Institutions

  • SEBI: Regulator for securities and capital markets.
  • RBI: Oversees banking and non-banking financial institutions.
  • IRDAI: Regulator for the insurance sector.
  • FIU-IND: Tracks financial transactions to prevent money laundering.
  • AMFI: Industry body for mutual fund regulation.
  • UIDAI: Issues Aadhaar, used in identity verification.

4. Types of KYC Accounts

  • Full KYC Account: Unrestricted account with full access to services.
  • Limited KYC Account: Temporary with limited transaction capability.
  • Non-KYC Compliant Account: May face service restrictions or closure.

5. AML & Risk Terms

  • AML: Policies to prevent money laundering.
  • PEP: Politically connected individual, requiring higher scrutiny.
  • CDD: Verifying the customer’s identity and financial background.
  • EDD: Applied to high-risk clients with additional verification.
  • Sanctions Screening: Checking clients against international watchlists.

6. Sector-Specific KYC

  • Stock Market: Mandatory for opening Demat/Trading accounts.
  • Mutual Funds: Required for any mutual fund investment.
  • Banking: Needed for account opening and services.
  • NBFCs & Fintech: Required for loan and digital wallet access.
  • Crypto: Mandatory verification as per Indian regulations.

7. Trading Account Jargons

  • Brokerage: Fee charged by brokers for executing trades.
  • Margin Trading: Buying more stocks using borrowed funds.
  • MIS: Intraday trading product requiring position closure by day end.
  • CNC: Used for delivery trades; stocks held in Demat.
  • F&O: Futures & Options contracts for hedging or speculation.
  • Stop Loss: Predefined level to automatically exit a trade.
  • Limit/Market Orders: Set trades at fixed vs current market prices.
  • LTP: Last traded price of a stock.
  • Circuit Limits: Regulatory caps on daily price movement.
  • Square Off: Closing intraday positions before market close.

8. Demat Account Jargons

  • Demat Account: Holds stocks and securities electronically.
  • Depositories (CDSL/NSDL): Institutions maintaining electronic records.
  • DP (Depository Participant): Brokers that provide Demat services.
  • ISIN: Unique stock identifier.
  • Pledge/Unpledge: Using shares as collateral.
  • BO ID: 16-digit unique Demat account identifier.
  • PoA: Legal authority for brokers to transact on your behalf.
  • T+1 Settlement: Trade settlement within one working day.
  • Corporate Actions: Events like dividends, bonus, rights issues.
  • Nominee: Appointed person who inherits holdings.

9. Types of Market Accounts

  • Demat Account: For holding securities.
  • Trading Account: For buying/selling securities.
  • Commodity Account: For commodity market trading.
  • MTF Account: Enables margin-based stock buying.
  • FPI Account: For foreign portfolio investment.
  • NRE/NRO Accounts: For NRIs to invest in Indian markets.

10. Fundamental Analysis Terms

  • Revenue/Net Income: Total earnings before/after expenses.
  • EPS: Earnings per share.
  • P/E Ratio: Price divided by earnings.
  • PEG, Book Value, ROE, ROA: Valuation and performance metrics.
  • EBITDA, FCF: Profit and liquidity indicators.
  • DCF: Discounted future value calculation.

11. Technical Analysis Terms

  • Support/Resistance: Price floors and ceilings.
  • Breakout: Price surpassing support/resistance.
  • Candlestick Patterns: Chart formations indicating trends.
  • Indicators: RSI, MACD, VWAP, Bollinger Bands.
  • Trend Strategies: Swing, scalping, momentum, breakout trading.

12. Regulatory & Compliance Jargon

  • LODR: Listing regulations for companies.
  • Insider Trading: Illegal trading using unpublished data.
  • Circuit Breakers: Auto trading halts on heavy index movement.
  • Algo Trading: Automated trading using algorithms.
  • SLB: Securities lending/borrowing.

13. Tax & Compliance

  • STT/LTCG/STCG: Transaction and capital gain taxes.
  • TDS: Tax deduction at source on NRI trades.

14. Corporate Action Terms

  • Bonus Shares, Rights Issue, Stock Split, Buyback.
  • Merger, Demerger, Acquisition, Delisting.

15. Market Metrics & Indicators

  • Market Cap: Total value of a company’s shares.
  • Beta, Alpha: Risk and outperformance measures.
  • Sharpe Ratio, Sortino Ratio: Risk-adjusted returns.

This glossary offers a foundational understanding for any investor seeking to navigate India’s dynamic financial markets with clarity and confidence.