Stock market terms that you must know
When you decide to do investment in stocks, you have to go through many articles and news channels like CNBC. You have noticed that there are many stock market-related jargon present. Because of these words, you couldn’t understand what is happening in the market. I have added major stock market-related words which help you to more familiar with the stock market
- Stock market
A stock market is a place where the selling and buying of shares take place
- Stock symbol
A unique arrangement of letters which represent the company
- Stock exchange
Is a place where brokers or traders can buy and sell securities like shares bonds etc
- SEBI – Securities exchange board of India
Regulatory Board for commodity and security markets in India
- NSE & BSE
NSE- national stock exchange and BSE – Bombay stock exchange both are the main stock market in India
- Stock Broker
A registered representative who buys and sells shares on behalf of investors
- Nifty 50
Index for NSE. In nifty 50 having the top 50 companies
- Sensex
Index for BSE, in Sensex having top 30 companies
- Stock index
It is an index that measures the stock market
- Nifty auto index
It’s an index that represents the behavior of the automobiles sector
- Nifty bank index
This index captures the performance of Indian banks. it includes 12 stocks from the banking sector
- Nifty consumer durable index
This index captures the performance of companies belonging to the consumer durables industry
- The nifty financial services index
This index captures the performance of financial institutions, insurance companies, etc. It includes 20 stocks from the financial service companies listed in NSE.
- Nifty FM-CG index
This index captures the performance of FMCG companies listed in the NSE.
- Nifty healthcare index
This index captures the performance of healthcare companies listed in the NSE. It includes 20 stocks
- Nifty IT index
This index captures the performance of IT-related companies listed in NSE. It industry has a major role in the Indian economy. Companies that have more than 50% turnover from IT-related come under this index
- Nifty Media index
This index captures the performance of media and entertainments companies that are listed in the NSE
- Nifty metal index
This index captures the performance of the metal sector including mining companies listed in the NSE. It includes 15 stocks from the metal sector.
- Nifty oil & gas index
This index captures the performance of companies related to oil, gas, and petroleum. It includes a maximum of 15 stocks from the oil and gas sector
- Nifty pharma index
This index captures the performance of pharmaceutical companies. This sector is one of the key sectors and is expected to be the area of growth in the future.
- Bank account
It’s an account maintained by a bank or financial institution
- Trading account
It’s an account that holds securities and holding with any brokerage company
- Demat account
It’s an account that can hold a dematerialized form of shares that investor purchase
- NSDL/ CDSL
NSDL – National securities depository limited
CDSL – central depository services limited
Both are depositories registered by the government of India. Which allows holding multiple forms of securities example stocks, bonds, and ETF
- Brokerage
A broker is an intermediary between seller and buyer to complete a transaction and charge a certain amount as a fee for the service
- Settlement cycle T+2 days
When an investor purchase a stock it will take 2 days from the transaction date to get reflected in your account.
- Intraday trading
Intraday is a type of trading that both buying and selling shares happen on the same day.
- Delivery trading
Delivery trading is another type of trading that an investor holds the shares for a particular time.
- Leverage
In the stock market broker allows you to use borrowed money to purchase shares. The broker limited the leverage for an investor. Suppose your broker gives 6x means 6 times the funds you have with the broker.
- Market orders
Market orders are those an investor purchase stock at a current price known market orders
- Limit orders
Limit orders are those an investor sets some limit for the share price. If the price f the stock reaches that point it will get executed.
- Stop loss
An investor sets a certain loss for the price of the stock if it reaches that point it will get executed. It allows the investor to limit the loss.
- Square off
Squaring off is widely used in intraday trading which is a reverse transaction of an investor made
- Short position
It is a trading technique that an investor sells the stock at a high price, and later buys the stock at a low price
- Long position
It’s a trading technique that investors forecast the price of a stock will increase. Purchase of stock at a lower price and sell that at a higher price.
- Asset allocation
Asset allocation is an investment strategy that allows an investor to balance risk versus return
- Portfolio
It’s a collection of investments like stocks, bonds, cash, ETFs, etc. maintained by an investor or financial professionals.
- Dividend
A dividend is a portion of the profit shared by a company with its shareholders.
- Announcement date
A company announcement of a bonus is known as an announcement date. Usually announced with record date.
- Record date
Investors who are holding the shares on the record date will receive a bonus from that company.
- Payment date
The investor who holds the shares on the record date will get a dividend on the payment date
- Share buyback
Repurchasing shares by the company is known as a buyback.
- Capital market
It’s a financial market where an investor can sell or buy long-term debt or equity-backed securities.
- Primary market
This is part of the capital market. It deals with the sale of equity-backed securities from an issuer to an investor
- Secondary market
It’s a place where investors can buy and sell securities. NSE and BSE are examples of that.
The company first offers shares of the company to the public in the stock market.
- Issue price
The issue price is the price of new security distributed to the investors before coming into trading in the secondary market
- Follow on public
A publicly listed company who already listed on the stock market issues shares to the public.
- Market capitalization
Market capitalization is the share price of a company multiplied by the no of shares issued by the company
- Earnings per share
It’s a financial measure to indicate the profitability of a company.
- PE ratio
It’s commonly known as the price-earnings ratio. It’s calculated based on the share price of a company to its earnings per share.
- Simple moving average
It’s the average price of the stock for a particular period.
- Support
Support is the representation of a lower level of the stock price over a time
- Resistance
Resistance is the representation of a higher level of the stock price over time.
- Blue-chip stocks
Companies that are financially sound in nature comes under blue-chip stocks
Examples are SBI, TCS, Infosys, ONGC, HDFC Bank, ITC, GAIL, Sun Pharma, etc.
- Penny stocks
Penny stocks are considered the stocks of small public companies, penny stocks are usually traded at low prices.
- Liquidity
Liquidity is considered how fast the shares of stock can buy and sell. High liquidity means it is easier to exit. If the low liquidity it’s very difficult to sell shares which leads to bigger losses
- Bull market
The price of a stock is rising in the stock market or expected t to raised in the market.
- Bear market
The price of stock get to fall for a while
- Swing trading
Traders purchase the stock and hold it for a few days. Traders may use fundamental analysis and technical analysis for this investment.
- Fundamental analysis
Fundamental analysis helps you to understand what stock need to buy, it will decide based on the intrinsic value.
- Technical analysis
Technical analysis widely used in swing and intraday trading will help you to understand when to purchase the stock.
- Equity derivative market
Equity derivatives calculated based on the equity movements of the underlying assets, Help an investor to hedge the risk.
- Trends
Trends are generally the movement of the stock price in an upward direction or downward direction over a while.
- Uptrend
The price of a stock moving in an upward direction is the uptrend for that stock.
- Downtrend
The price of a stock moving downward direction is the downtrend for that stock.
- Sideways trend
The horizontal movement of the stock price is known as the sideways trend
- Volatility
It’s a rate of variation of a price of a security that increases or decreases over a time
- Averaging
It’s a trading strategy and it helps the investor to reduce or increase the share price to overcome market volatility
- Charts
Chart creates a trading signal and it’s a sign of future stock price movements.