Understanding share market terminology is essential for anyone engaging in stock market activities. These terms serve as a foundation. Knowing the terms helps investors analyze and make informed choices.
It allows seamless communication with brokers, advisors, and fellow traders.
Misunderstanding terms can lead to costly errors in trading or investing.
Knowledge of terminology boosts confidence in navigating the market.
50 Share Market Terminologies with Definitions and Examples
- Stock
A unit of ownership in a company.
Example: If you buy a stock of Company A, you become a partial owner. - Share
A single unit of stock.
Example: Buying 10 shares of Reliance means you own 10 units of its stock. - Bull Market
A market where prices are rising.
Example: When the Sensex rises continuously, it’s a bull market. - Bear Market
A market where prices are falling.
Example: If Nifty 50 drops by 20%, it’s a bear market. - Dividend
A portion of a company’s profits distributed to shareholders.
Example: Company X declares a ₹10 dividend per share. - IPO (Initial Public Offering)
When a company sells shares to the public for the first time.
Example: Zomato launched its IPO in 2021. - Market Capitalization
Total value of a company’s shares.
Example: Market cap = Share price × Total shares outstanding. - Equity
Ownership in a company.
Example: Buying shares of Infosys is buying its equity. - Portfolio
A collection of investments.
Example: Stocks, mutual funds, and bonds in one account. - Index
Measures the performance of a group of stocks.
Example: Sensex and Nifty are market indices. - Volume
The number of shares traded in a period.
Example: 1 lakh shares of Tata Motors were traded today. - Liquidity
Ease of buying or selling a stock.
Example: Blue-chip stocks are highly liquid. - P/E Ratio (Price-to-Earnings)
Measures a stock’s price relative to earnings.
Example: If the P/E ratio is 20, you pay ₹20 for ₹1 of earnings. - Blue-Chip Stock
Shares of well-established, financially stable companies.
Example: TCS, Infosys, and HDFC Bank. - Penny Stock
Low-priced shares of small companies.
Example: A stock trading at ₹10 per share. - Day Trading
Buying and selling stocks within the same day.
Example: Buying 100 shares of Wipro at 10 AM and selling at 2 PM. - Swing Trading
Holding stocks for a few days to weeks.
Example: Holding Tata Steel for 10 days before selling. - Stop-Loss Order
An order to sell a stock to limit losses.
Example: Selling a stock if it drops below ₹500. - Margin Trading
Borrowing funds to trade.
Example: Using ₹10,000 to buy ₹50,000 worth of shares. - Broker
A person or platform facilitating stock trading.
Example: Zerodha or Angel Broking. - Demat Account
An account to store stocks in electronic form.
Example: Your Demat account holds your TCS shares. - Trading Account
An account to buy and sell stocks.
Example: Used to execute stock trades. - Bid Price
The highest price a buyer is willing to pay.
Example: A buyer bids ₹150 for a share. - Ask Price
The lowest price a seller is willing to accept.
Example: A seller asks ₹155 for the same share. - Spread
The difference between the bid and ask prices.
Example: If the bid is ₹150 and ask is ₹155, the spread is ₹5. - Capital Gains
Profit from selling a stock.
Example: Buying at ₹100 and selling at ₹150 earns ₹50 capital gains. - Short Selling
Selling borrowed shares hoping to buy them back at a lower price.
Example: Selling at ₹200 and repurchasing at ₹150. - Bullish
Expecting prices to rise.
Example: An analyst is bullish on Reliance. - Bearish
Expecting prices to fall.
Example: An investor is bearish on IT stocks. - Support Level
A price level where a stock tends to stop falling.
Example: Infosys has support at ₹1,000. - Resistance Level
A price level where a stock tends to stop rising.
Example: Reliance faces resistance at ₹2,500. - Volume Weighted Average Price (VWAP)
Average price of a stock based on volume.
Example: VWAP = ₹1,200 for Tata Steel today. - Circuit Limit
The maximum price movement allowed in a day.
Example: Upper circuit is 10%; lower circuit is 10%. - Leverage
Using borrowed funds to trade.
Example: Trading ₹50,000 with only ₹10,000. - Futures Contract
Agreement to buy/sell at a future date and price.
Example: Buying a gold futures contract for delivery next month. - Options Contract
Right to buy/sell a stock at a fixed price.
Example: Buying a call option on HDFC Bank. - Strike Price
The price at which an option can be exercised.
Example: A call option with a strike price of ₹1,200. - Hedge
Reducing risk by taking an offsetting position.
Example: Buying put options to hedge against falling prices. - Rally
A sustained rise in stock prices.
Example: IT stocks rallied after good quarterly results. - Correction
A temporary decline in stock prices.
Example: A 10% drop after a prolonged rally. - Yield
Earnings from an investment expressed as a percentage.
Example: A ₹1,000 bond yielding 5% returns ₹50 annually. - Book Value
The net asset value of a company.
Example: Book value = Total assets – Total liabilities. - Multibagger Stock
A stock that gives multiple returns.
Example: Titan became a multibagger over 10 years. - Stock Split
Dividing existing shares into multiple shares.
Example: A 1:2 stock split doubles the number of shares. - Bonus Shares
Free shares given to shareholders.
Example: 1:1 bonus means one free share for every share held. - Buyback
A company repurchasing its own shares.
Example: TCS announces a buyback at ₹4,000 per share. - Volatility
Fluctuations in stock prices.
Example: High volatility in Nifty during budget announcements. - Alpha
Excess returns generated compared to the market.
Example: A fund with 5% alpha outperformed the market by 5%. - Beta
Measures stock sensitivity to market movements.
Example: A beta of 1.5 means the stock moves 1.5x the market. - NAV (Net Asset Value)
Value per unit of a mutual fund.
Example: A fund’s NAV is ₹200 per unit.
