Stock Market Glossary

A measure of how much a stock or fund outperforms (positive alpha) or underperforms (negative alpha) its benchmark index. An alpha of 2 means the investment returned 2% more than the index, after adjusting for risk.

A yearly document published by a listed company that includes financial statements (P&L, balance sheet, cash flow), management commentary, auditor's report, and business outlook. Mandatory for all BSE/NSE-listed companies.

The lowest price a seller is willing to accept for a share. Together with the Bid Price (what a buyer will pay), this forms the Bid-Ask Spread. A narrower spread typically means better liquidity.

The strategy of dividing your investments across asset classes — equity, debt, gold, real estate, and cash — to balance risk and return based on your goals and time horizon.

A period when stock prices fall 20% or more from recent highs, usually over at least two months. Bear markets reflect widespread pessimism and often coincide with economic slowdowns. The opposite of a Bull Market.

A measure of a stock's volatility relative to the market (typically NIFTY 50). A beta of 1 means the stock moves in line with the index. Beta > 1 means more volatile; beta < 1 means less volatile. Negative beta means the stock tends to move opposite to the market.

Shares of large, well-established, financially sound companies with a long track record. In India, companies like Reliance, TCS, HDFC Bank, and Infosys are considered blue chips. They tend to be more stable but offer lower growth than mid or small caps.

A fixed-income instrument where you lend money to a government or company for a fixed period at a stated interest rate (coupon). At maturity, you get your principal back. Bonds are generally less risky than equities.

The net worth of a company as shown on its balance sheet — total assets minus total liabilities. Book value per share = total equity ÷ number of shares. The Price-to-Book (P/B) ratio compares market price to book value.

Asia's oldest stock exchange, founded in 1875. Headquartered in Mumbai, the BSE lists over 5,000 companies and runs the SENSEX index. It operates alongside the NSE for equity and derivatives trading in India.

A sustained period of rising stock prices — typically a 20%+ gain from recent lows. Bull markets reflect economic optimism, strong corporate earnings, and investor confidence. India experienced major bull runs in 2003–2008 and 2020–2024.

The rate at which an investment grows from its starting value to its ending value, assuming profits are reinvested each year. CAGR smooths out volatility and is the most honest way to compare investment returns over time.

A derivative contract that gives the buyer the right (but not obligation) to buy a stock or index at a fixed price (strike price) before the expiry date. Buyers profit when the asset price rises above the strike price.

An automatic trading halt triggered when a stock's price moves beyond a fixed percentage limit in a single session. SEBI sets upper and lower circuit limits (e.g. 5%, 10%, 20%) to prevent extreme price swings.

The latest traded price of a stock on the exchange. CMP changes continuously during market hours (9:15 AM – 3:30 PM IST) based on buy and sell orders.

The total pool of money in a fund or investment portfolio. For mutual funds, corpus refers to the total assets under management (AUM). For individual investors, it often means the target retirement or goal amount.

Buying and selling shares within the same trading session, closing all positions before market close. Day traders aim to profit from intraday price movements. It is high risk and requires a solid understanding of technical analysis.

An electronic account that holds your shares and securities in digital form — replacing physical share certificates. In India, demat accounts are maintained by NSDL or CDSL depositories, and you access them through a broker like Zerodha, Groww, or Angel One.

Financial contracts whose value is derived from an underlying asset — stock, index, commodity, or currency. Common derivatives in India include Futures and Options (F&O) traded on NSE. They are used for hedging or speculation.

Spreading investments across multiple assets, sectors, and geographies so that a loss in one doesn't heavily impact the whole portfolio. The core principle: don't put all your eggs in one basket.

A portion of a company's profits paid out to shareholders, usually quarterly or annually. Expressed as ₹ per share or as a yield (dividend ÷ share price × 100). Not all companies pay dividends — growth companies often reinvest profits instead.

The preliminary document filed by a company with SEBI before launching an IPO. It contains the company's financials, business model, risks, and how it plans to use the IPO proceeds. The final version, filed after SEBI approval, is called the Red Herring Prospectus (RHP).

A company's net profit divided by its total number of outstanding shares. EPS = Net Profit ÷ Shares Outstanding. Rising EPS generally signals a healthy, growing company. The P/E ratio is calculated by dividing share price by EPS.

Ownership interest in a company, represented by shares. As an equity investor, you participate in the company's profits (via dividends) and capital appreciation. Equity holders are the last to be paid in case of liquidation.

A basket of securities (stocks, bonds, or commodities) that trades on a stock exchange like a single share. Popular Indian ETFs include NIFTY 50 ETF, NIFTY Next 50 ETF, and Gold ETFs. ETFs offer low cost and instant diversification.

The cut-off date to qualify for a declared dividend. If you buy shares on or after this date, you will not receive the upcoming dividend. Share prices typically fall by approximately the dividend amount on the ex-dividend date.

The nominal value printed on a share certificate, typically ₹1, ₹2, ₹5, or ₹10 in India. Face value is used to calculate dividends and is important during stock splits and bonus issues. It has no relation to the market price.

The percentage of a company's total shares available for trading by the public — excluding shares held by promoters, government, or strategic investors. Indices like NIFTY 50 use free-float market cap for constituent weightage.

A method of evaluating a company's intrinsic value by studying its financials (revenue, profit, debt), management quality, industry position, and macroeconomic factors. Fundamental analysts try to identify undervalued or overvalued stocks.

A derivative contract to buy or sell an asset at a predetermined price on a future date. Unlike options, futures obligate both parties to complete the transaction. In India, NIFTY Futures and stock futures are widely traded on the NSE.

Shares of companies expected to grow their revenue and earnings faster than the market average. Growth stocks typically reinvest profits instead of paying dividends, and often trade at high P/E ratios. Examples in India include Zomato, Paytm in early stages.

An investment made to reduce the risk of adverse price movements in another asset. Common hedging tools in India include buying Put Options on your stock holdings or shorting NIFTY Futures during volatile periods.

A statistical measure tracking the performance of a group of stocks. In India, the most followed indices are NIFTY 50 (top 50 NSE companies) and SENSEX (top 30 BSE companies). Index funds passively replicate these benchmarks.

Buying and selling stocks within the same trading day. Intraday positions must be squared off before 3:15 PM or your broker will close them. Brokers offer up to 5x leverage on intraday trades, which amplifies both gains and losses.

When a private company offers its shares to the public for the first time on a stock exchange. In India, IPO applications are made through ASBA (your bank account is blocked, not debited) or UPI. SEBI regulates the entire IPO process.

Companies ranked 1–100 by market capitalisation on Indian exchanges, as defined by SEBI. Examples: Reliance, TCS, HDFC Bank. Large caps are generally more stable and liquid than mid or small caps.

An order to buy or sell a stock at a specific price or better. A buy limit order executes only at your specified price or lower; a sell limit order executes at your price or higher. Unlike market orders, execution is not guaranteed.

How quickly and easily a stock can be bought or sold without significantly affecting its price. High-liquidity stocks (like NIFTY 50 constituents) have large daily trading volumes and tight bid-ask spreads. Illiquid stocks are harder to exit quickly.

Owning a stock or derivative with the expectation that its price will rise. Going 'long' is the standard buy-and-hold approach. The opposite is a 'short position', where you sell borrowed shares expecting prices to fall.

The total market value of all outstanding shares of a company. Market Cap = Share Price × Total Shares Outstanding. It classifies companies as Large Cap (top 100), Mid Cap (101–250), or Small Cap (251+) as per SEBI's categorisation.

An order to buy or sell a stock immediately at the best available current price. Market orders guarantee execution but not the exact price, especially for illiquid stocks where the actual fill price may differ from the quoted price.

Companies ranked 101–250 by market capitalisation on Indian exchanges, per SEBI's definition. Mid caps offer higher growth potential than large caps but carry more volatility. Examples: Trent, Mphasis, Persistent Systems.

A technical indicator that smooths price data by calculating the average over a set period. The 50-day and 200-day moving averages (DMA) are widely watched. A 'golden cross' (50 DMA crossing above 200 DMA) is considered a bullish signal.

A pool of money collected from many investors and managed by a professional fund manager. The fund invests in stocks, bonds, or other assets per its stated objective. In India, mutual funds are regulated by SEBI and AMFI.

The per-unit value of a mutual fund, calculated daily. NAV = (Total Assets − Liabilities) ÷ Units Outstanding. When you invest in a mutual fund, you buy units at the current NAV. Unlike stocks, NAV is not traded on an exchange.

India's benchmark stock market index, comprising the 50 largest and most liquid companies listed on the NSE. Managed by NSE Indices Ltd, NIFTY 50 is widely used as a proxy for the Indian equity market's overall health.

India's largest stock exchange by trading volume, established in 1992. The NSE introduced screen-based electronic trading to India and is home to the NIFTY indices. It handles the majority of India's equity, F&O, and currency derivatives trading.

The total number of outstanding derivative contracts (futures or options) that have not been settled or closed. Rising open interest with rising prices signals a strong bullish trend; rising OI with falling prices suggests a bearish trend.

Derivative contracts giving the buyer the right (not obligation) to buy (Call) or sell (Put) an asset at a fixed price before expiry. Options sellers (writers) collect premium and take on the obligation. Weekly NIFTY options are among the world's most traded contracts.

A valuation metric = Share Price ÷ EPS. It tells you how much investors are paying per rupee of earnings. A high P/E may signal overvaluation or strong growth expectations; a low P/E may signal undervaluation or weak growth. Always compare P/E within the same sector.

Your complete collection of investments — stocks, mutual funds, bonds, gold, real estate, etc. A well-constructed portfolio is diversified across asset classes and sectors to balance risk and return in line with your financial goals.

The percentage of a company's shares held by its founders, founding family, or parent company. High, stable promoter holding (>50%) often signals confidence in the business. Promoters pledging their shares for loans is considered a red flag.

A derivative contract giving the buyer the right to sell an asset at a fixed price (strike price) before expiry. Put buyers profit when the asset price falls below the strike price. Puts are commonly used to hedge a long portfolio against market downturns.

A sustained increase in stock prices over a period of time, after a decline or consolidation. A rally can be market-wide or sector-specific, driven by positive news, earnings beats, or macro events like RBI rate cuts.

When a company offers existing shareholders the right to buy additional shares at a discount to the market price, in proportion to their current holding. It's a way for companies to raise capital. Shareholders can exercise, sell, or let the rights lapse.

A profitability ratio = Net Profit ÷ Shareholders' Equity × 100. It measures how effectively a company uses shareholder money to generate profit. ROE above 15% is generally considered healthy, though benchmarks vary by industry.

A profitability ratio = EBIT ÷ Capital Employed × 100. ROCE measures how efficiently a company uses both equity and debt to generate profit. It's especially useful for capital-intensive industries like manufacturing and infrastructure.

India's primary capital markets regulator, established in 1988. SEBI regulates stock exchanges, brokers, mutual funds, IPOs, insider trading, and investor protection. It is to Indian markets what the SEC is to US markets.

The benchmark index of the Bombay Stock Exchange (BSE), comprising 30 of India's largest and most actively traded companies. Short for 'Sensitive Index', SENSEX was launched in 1986 and is one of the oldest indices in India.

Borrowing shares and selling them with the expectation of buying them back at a lower price later, pocketing the difference. In India, SEBI permits short selling by retail investors through the Securities Lending and Borrowing (SLB) mechanism.

Companies ranked 251 and below by market capitalisation, as per SEBI's categorisation. Small caps offer high growth potential but carry significant liquidity and volatility risk. They can be multi-baggers — or turn into wealth destroyers.

When a company divides its existing shares into multiple smaller units. In a 2-for-1 split, you get 2 shares for every 1, but the price halves — so total value stays the same. Splits are done to improve affordability and liquidity.

A pre-set price at which you automatically sell a stock to limit your loss. For example, buying at ₹500 and setting a stop loss at ₹450 caps your downside at 10%. Stop loss orders are essential risk management tools, especially for traders.

Key technical analysis concepts. Support is a price level where a stock tends to stop falling and bounce back (buyers step in). Resistance is a level where it tends to stop rising (sellers step in). Breakouts above resistance or below support signal strong moves.

India's trade settlement cycle where transactions are settled one business day after the trade date. SEBI moved Indian markets from T+2 to T+1 settlement in 2023, making India one of the fastest-settling markets globally.

A method of forecasting price direction by analysing historical price charts, volume, and indicators like RSI, MACD, and moving averages. Unlike fundamental analysis, it focuses purely on price action and market psychology.

A unique abbreviation used to identify a listed company on a stock exchange. Examples: RELIANCE (Reliance Industries), TCS (Tata Consultancy Services), INFY (Infosys). NSE and BSE may use slightly different ticker symbols for the same company.

The maximum percentage a stock price can rise (upper circuit) or fall (lower circuit) in a single trading session. SEBI sets these at 2%, 5%, 10%, or 20% depending on the stock. Trading halts when a circuit is hit, preventing extreme panic or euphoria.

An investment strategy of buying stocks trading below their estimated intrinsic value — stocks that appear cheap relative to their fundamentals. Popularised by Benjamin Graham and Warren Buffett, value investing requires patience and a long-term horizon.

The degree of price fluctuation of a stock or index over time. High volatility means large price swings; low volatility means more stable prices. The India VIX (Volatility Index) measures expected 30-day volatility of the NIFTY 50.

The total number of shares traded in a stock during a given period. High volume on a price move confirms the strength of the move; low volume suggests it may not sustain. Volume is a key confirmation tool in technical analysis.

The annualised return on an investment with irregular cash flows — like SIP investments made on different dates. Unlike CAGR (which assumes a single lumpsum), XIRR accounts for the timing of each installment, giving a more accurate return figure for SIP investors.

The income generated by an investment expressed as a percentage of its cost or current price. Dividend yield = (Annual Dividend ÷ Share Price) × 100. Bond yield = (Annual Coupon ÷ Bond Price) × 100. Higher yield often indicates higher risk.

The highest and lowest price at which a stock has traded during the past 52 weeks. These levels are watched closely — stocks breaking above their 52-week high often attract momentum buyers; those near 52-week lows may be either value traps or turnaround candidates.