50 Share Market Terminologies – Part 2

Share Market Terminologies - Part 2

50 Share Market Terminologies with Definitions and Examples

Part 1

  • Arbitrage
    Profiting from price differences in different markets.
    Example: Buying a stock at ₹100 in one market and selling at ₹105 in another.
  • Ask Size
    The number of shares a seller is offering at a given price.
    Example: 1,000 shares available at ₹200.
  • Bid Size
    The number of shares a buyer wants to purchase at a given price.
    Example: 500 shares requested at ₹195.
  • Candlestick Chart
    A chart showing price movement in a specific time frame.
    Example: A green candlestick indicates a price increase.
  • Corporate Action
    Events that affect shareholders, like dividends or splits.
    Example: Infosys announces a 1:1 bonus issue.
  • Debt-to-Equity Ratio
    Ratio comparing company debt to equity.
    Example: A ratio of 2 means ₹2 debt for every ₹1 equity.
  • Delisting
    Removing a company’s shares from the stock exchange.
    Example: Company X delisted from NSE due to non-compliance.
  • ESOP (Employee Stock Option Plan)
    Stocks offered to employees at a discounted rate.
    Example: TCS employees receive shares under ESOP.
  • Face Value
    Original price of a share set by the company.
    Example: A share has a face value of ₹10.
  • Fundamental Analysis
    Evaluating a stock based on company performance and financials.
    Example: Studying earnings, revenue, and future growth potential.
  • Technical Analysis
    Predicting stock price movements using charts and trends.
    Example: Using moving averages to identify entry points.
  • Greeks
    Variables used in options pricing models.
    Example: Delta measures price sensitivity to stock changes.
  • Intraday Trading
    Buying and selling stocks within the same trading day.
    Example: Buying Tata Motors at 10:00 AM and selling at 2:00 PM.
  • Market Order
    An order to buy or sell at the current market price.
    Example: Buying a stock immediately at ₹250.
  • Limit Order
    An order to buy or sell at a specified price or better.
    Example: Setting a buy limit order for ₹100.
  • Oversold
    A stock considered undervalued due to excessive selling.
    Example: A stock drops sharply and becomes oversold.
  • Overbought
    A stock considered overvalued due to excessive buying.
    Example: Nifty IT stocks after a long rally.
  • Order Book
    A list of buy and sell orders for a stock.
    Example: Buyers offer ₹250; sellers demand ₹255.
  • Payout Ratio
    Percentage of earnings paid as dividends.
    Example: A 40% payout ratio means ₹40 dividend from ₹100 earnings.
  • PEG Ratio (Price/Earnings-to-Growth)
    Evaluates stock value by considering growth rate.
    Example: A PEG ratio below 1 indicates undervaluation.
  • Stock Buyback
    Company repurchases its shares from the market.
    Example: Infosys announces a ₹10,000 crore buyback.
  • Short Covering
    Buying shares to close a short position.
    Example: Traders rush to buy stocks they borrowed earlier.
  • SEBI (Securities and Exchange Board of India)
    Regulatory body overseeing Indian stock markets.
    Example: SEBI regulates stock exchanges like NSE and BSE.
  • Spread Betting
    Speculating on price movement without owning the stock.
    Example: Betting on Nifty rising above 20,000 points.
  • Swing High
    A peak point in price movement.
    Example: Nifty 50 touched 19,000 before declining.
  • Swing Low
    A trough point in price movement.
    Example: A stock drops to ₹1,000 before recovering.
  • Time Decay
    Reduction in option value as expiration approaches.
    Example: An option loses value as its expiry nears.
  • Volatility Index (VIX)
    Measures market volatility expectations.
    Example: High VIX indicates increased market uncertainty.
  • Wealth Management
    Financial planning to grow and protect wealth.
    Example: Investing in diversified portfolios for long-term growth.
  • Yield Curve
    A graph showing bond yields across maturities.
    Example: A steep yield curve signals strong economic growth.
  • Zombie Company
    A company barely earning enough to pay interest on debt.
    Example: A startup surviving on loans without profits.
  • Momentum Investing
    Investing in stocks with upward trends.
    Example: Buying high-performing IT stocks during a tech rally.
  • Book Building
    Process of determining share price in IPOs.
    Example: An IPO price range is set between ₹500 and ₹600.
  • Trailing Stop Loss
    A stop-loss order that moves with the stock price.
    Example: Setting a trailing stop loss 5% below the current price.
  • Initial Margin
    The minimum amount required to start trading futures or options.
    Example: Paying ₹10,000 as initial margin for a futures trade.
  • Collateral
    Assets pledged to secure a loan or trade.
    Example: Shares used as collateral for a margin account.
  • Derivatives
    Financial instruments derived from underlying assets.
    Example: Futures and options are derivatives of stocks.
  • Index Fund
    A mutual fund mirroring a stock index.
    Example: A fund tracking the Nifty 50 index.
  • ETF (Exchange-Traded Fund)
    A fund traded on stock exchanges like a stock.
    Example: Nifty Bees is an ETF tracking Nifty 50.
  • Growth Stock
    A stock expected to grow faster than average.
    Example: A startup in a booming tech sector.
  • Value Stock
    A stock trading below its intrinsic value.
    Example: An undervalued company with strong fundamentals.
  • Intrinsic Value
    The actual worth of an asset.
    Example: Calculating an option’s intrinsic value using its strike price.
  • Payout Day
    The day dividends are credited to shareholders.
    Example: Dividends are paid on 15th November.
  • Mutual Fund
    A pool of money collected to invest in stocks, bonds, etc.
    Example: An equity mutual fund invests primarily in stocks.
  • Asset Allocation
    Dividing investments among various asset classes.
    Example: 60% stocks, 30% bonds, and 10% gold.
  • Sector Rotation
    Moving investments between sectors based on performance.
    Example: Investing in IT during tech growth and shifting to FMCG later.
  • Leveraged ETF
    An ETF using debt to amplify returns.
    Example: A 2x leveraged ETF moves double the index.
  • Dark Pool
    Private trading platforms not open to the public.
    Example: Large institutional trades occur in dark pools to avoid market impact.
  • Block Trade
    A large trade executed privately.
    Example: A mutual fund buying 1 million shares of Tata Steel in a single deal.
  • Stop Order
    An order to buy or sell once the price reaches a specific point.
    Example: A stop order to sell a stock if it falls below ₹1,000.

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