IMPORTANT TERMS IN STOCK MARKET

Agent: A brokerage firm is said to be an agent when it acts on behalf of the client in buying or purchasing of shares. At no point of time in the entire transaction the agent will own the shares.
Bear Market : A market in which stock prices are falling consistently.
Beta: It is a measurement of relationship between stock price of any particular stock and the movement of whole market.
Bid: It is the highest price a buyer is willing to pay for a stock. It is opposite of ask/offer.
Blue Chip Stock: Stocks of large, well-established and financially-sound companies which hold a record of consistently increasing rate of paying the dividends over decades to its stock holders. Blue chip stocks typically have a market capitalization in thousands of crores.
Bonds: It is promissory note issued by companies or government to its buyers. It speaks about the specified amount held for a specified time period by the buyer.
Book: An electronic record of managing all the pending buy and sell orders of particular stocks.
Broker/Brokerage Firm: A registered securities firm are called broker/brokerage firm. Broker’s acts as an advisor for purchase and sell of listed stocks, they do not own the securities at any point of the time. But they charge a commission for their service.
Bull Market: A market in which the stock price are increasing consistently.
Business Day: Monday to Friday, excluding public holidays.
Close Price: The final price at which the stock is traded on a given particular trading day.
Convertible Securities: A security (bonds, debentures, preferred stocks) by an issuer that can be converted into other securities of that issuer are known as convertible securities. The conversion usually occurs at the option of the holder, but it may occur at the option of the issuer.
Debentures: A type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer.A debenture is an unsecured form of investment.
Defensive Stock: A stock that provides a constant dividends and stable earnings even in the periods of economic downturn i.e. even in the extreme critical situations of the stock market these companies continue to pay the dividends at a constant rate.
Delta: The ratio that compares the change in the price of the underlying asset to the corresponding change in the price of a derivative. Sometimes referred to as the hedge ratio. It has a range from 0 to 1.
Derivatives: A security whose price is derived from one or more underlying assets. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Dividend: A portion of the company’s earnings decided to pay to its shareholders in return to their investments. It is usually declared as a percentage of current share price or some specified INR value, usually decided by the board of directors of the company.
Equity: Common and preferred stocks, which represents shares in the ownership of a company.
Face value: It is the cash denomination or the amount of money the holder of the individual security going to earn from the issuer of the security at the time of maturity. It is also known as par value.
Income Stock: A security which has a solid record of dividend payments and offers the dividend higher than the common stocks.
Index: A statistical measurement of change in the economy or security market. Indices have their own calculation methodology and are usually measured as a percentage change in the base value over the time.
Initial Public Offering (IPO): A company’s first issue of shares to general public.
Limit Order: An order to buy or sell a share at a specified price. Listed Stocks: The shares of an issuer that are traded on the stock exchange.
Market Capitalization: The total value in INR of all of a company’s outstanding shares. It is calculated by multiplying all the outstanding shares with the current market price of one share.
Portfolio: Holding of any individual or institution. A portfolio may include various type of securities of different companies operating in different sectors.
Pre-opening Session: The pre-open session is for duration of 15 minutes i.e. from 9:00 AM to 9:15 AM. In pre-open session order entry, modification and cancelation takes place.
Price Earnings (P/E) Ratio: A valuation of companies last traded share price to its latest reported 12 months earnings per share. For example, if the last traded share price of any X company is INR 40 and earnings over a last 12 months per share is INR 2, then the P/E ratio of that X company is INR 20 (40/2)
Risk: A probable chances of investments actual returns will be reduced then as calculated. Risk is usually measured by calculating the standard deviation of the historical price returns. Standard deviation is directly proportional to the degree of risk associated.
Stock Split: An attempt to increase the number of outstanding shares of a company by splitting the existing shares. It is usually done to increase the availability of shares in the market. The usual split ratio is 2:1 or 3:1, i.e. one share is split into two or three.
Thin Market: A market in which there are comparatively low number of bids to buy and offers to sell. Since the number of transactions is low the prices are very volatile.
Trading session: The period of time from 9:15 AM to 3:30 PM is open for trading for both sellers and buyers, within this time frame all the orders of the day must be placed. Here all the orders placed in pre-opening sessions are matched and executed.
Yield: It is the measure of return on investments in terms of percentage. Stock yield is calculated by dividing the current price of the share by the annual dividend paid by the company for that share. For example, if the current price of the share is INR 100 and the dividend paid is INR 5 per share annually, then the stock yield is 5%.