Arbitrage : Business of buying in one exchange and selling in another to take advantage of price differences.
Auction : A mechanism used by the Stock Exchange to fulfill its obligation to the buyer of a security. It is done when the seller is unable to deliver the scrips sold by him. The security in question is offered by a member who has ready possession of the scrips.
Bear : An operator who expects the share price to fall
Bear Market : A weak and falling market where buyers are absent
Blue Chips : Shares of financially sound, well established companies with a track record of good growth and regular payment of dividends.
Bonus Shares : Shares allotted to the existing shareholders by capitalising the reserves into additional capital. When market expects a company to come out with a Bonus Issue, the price of the shares normally goes up.
Book Closure : A company closes its register of members for updating the records to facilitate payment of dividends or issue of rights of bonus shares. Book closure is the period during which this process is done and deliveries are not effected in the clearing house.
Bourse : A Stock Exchange
Bull : An operator who expects the share price to rise and takes position in the market to sell at a later date.
Bull Market : A rising market where buyers far outnumber the sellers
Call Option : An option where the buyer gets the right to buy the underlying security at a specified future date.
Carry Forward : Settlement where positions are carried forward from one settlement to another settlement.
Cash Settlement : Payment for transactions done in one settlement on the due date.
Circuit Breaker : A mechanism used to restrain the market when it gets overheated. The Exchange may relax the limit after a cooling off period of about half an hour.
Clearing House : It is a legal counter party to both legs of every trade. The netted purchase and sale positions of the trading Members are settled through the Clearing House.
Company Objection : In some cases, the companies send back the certificates received for transfer citing reasons for their inability to do so. The letter sent by the Company is known as Company Objection.
Cum Bonus : A share is described as cum bonus when the purchaser is entitled for current bonus
Cum Dividend : A shares is described as cum dividend when the purchaser is entitled for current dividend
Cum Rights : A share is described as cum rights when the purchaser is entitled for current rights
Day Order : The quantity that remains untraded is not cancelled until the end of the day.
Dealer : A Dealer is a user who works on behalf of the Trading Member
Delivery Based Trading : When a share is bought or sold for the purpose of receiving or effecting deliveries.
Dematerialisation : Process of converting a security from physical form to electronic form
Derivatives : A financial contract between two or more parties and it is derived from the future value of an underlying asset.
Disclosed Quantity : An order entered in the system wherein only a fraction of the order quantity is disclosed to the market.
Dividend : Cash payment made to the shareholders out of the profits of the company.
Ex Bonus : A share is described as Ex Bonus when the buyer is not entitled for the Bonus. The seller remains the beneficiary.
Ex Dividend : A share is described as Ex Dividend when the buyer is not entitled for the Dividend. The seller remains the beneficiary.
Ex Rights : A share is described as Ex Rights when the buyer is not entitled for the Rights. The seller remains the beneficiary.
Expiry Date : The date and time after which a writer of an option cannot exercise his rights.
Exposure Limit : The limit allowed to the Broker by the Exchange or to the customer by broker. It is the total value upto which one is allowed to hold open positions at any point of time.
Futures Contract : An agreement between parties for a specified asset for performance on a fixed date in future.
Hedging : It is protecting an existing asset position from an adverse future position. A hedger takes an equal and opposite position in the futures market to the one he holds in the equity market.
Insider Trading : Trading carried out by people who have access to non public price sensitive information.
Limit Order : A buy or sell order where price is specified at the time of order entry
Long Position : A bull position in a security
Margin : An upfront payment made by the customer to take position in the market. His exposure limit is fixed based on the margin money brought in by him.
Mark To Market : A notional profit or loss of a long or short position as compared to the current market price.
Market Order : An order where no price specification is mentioned at the time of placement
NSCCL : National Securities Clearing Corporation Limited. The Clearing Corporation of the National Stock Exchange.
NSE : National Stock Exchange
Offer : The price at which a share is available in the market
Offer Price : The price at which a company offers its shares to the public through issue of a prospectus
Order Cancellation : A facility available in the trading system where one is allowed to cancel the order placed earlier.
Order Modification : A facility available in the trading system where one is allowed to modify an earlier order.
Pay In : The designated day on which the members pay securities and funds to the clearing house
Pay Out : The designated day on which the Clearing House effects payment and deliveries to the members
Price Band : It sets up the upper and lower limits for a share's movement on any given day. It is based on the previous trading day's closing price. The system will not accept the orders that are out of bound.
Price Rigging : A process where persons collude to artificially increase or decrease the price of a security
Put Option : An option where the buyer gets the right to sell the underlying security at a specified future date.
Quote : Prices at which a share can be bought or sold
Record Date : The date on which the beneficial owner of the Corporate Benefits is determined.
Rematerialisation : Process of converting the shares from electronic form to physical form
Rights Issue : Issue of new share to the existing shareholders at a price which is normally lower than the current market price of the old shares. It is issued in a fixed ratio to the those shares which are already held.
SEBI : The Securities Exchange Board of India, the regulatory body controlling the functioning of Stock Exchanges in India.
Stop Loss Order : An order placed with a 'trigger price'. It is placed to minimise the losses and the order can be either for a purchase or a sale.
Volume : The total number of shares that are transacted in a scrip. It helps in analyzing and understanding the reasons behind price
Pasted from <http://www.sharetipsinfo.com/Glossary.html>
Average Annual Return
The percent profit your Mutual Fund or your portfolio of shares is making on a yearly basis. If the report period is shorter or longer than a year, the average annual return is converted to an annual rate.
A prolonged period of falling prices in a stock market. The adjective ‘Bearish’ describes an opinion or outlook that expects a decline in price, either by the general market or by an underlying stock, or both.
The price at which a buyer is willing to buy an option or stock.
A stock considered reliable with regard to dividend income and capital value is called Blue chip. Such shares of renowned companies with established and stable businesses can offer the investors a steady flow of earning.
It is a promissory note issued by a company or government to the lenders. A bond invester lends money to the issuer and in exchange, the issuer promises to repay the loan amount on a predetermined maturity date alongwith a specified amount of interest.
A share issued by companies to their shareholders free of cost by capitalisation of accumulated reserves from the profits earned in the earlier years.
Dates between which a company keeps its register of members closed for updating. It happens prior to payment of dividends or issue of new shares.
Brokerage is the commission charged by the broker for selling or buying securities. SEBI determines the maximum brokerage chargeable in India.
A rising market with abundance of buyers and few sellers. ‘Bullish’ Describes an opinion or outlook in which one expects a rise in price, either by the general market or by an individual share.
When price of a stock increases or decreases by a certain percentage in a single day it hits the circuit breaker. Once the stock hits the circuit breaker, trading in the stock above (or below) that price is not allowed for that particular day.
Close-ended Mutual Fund
A mutual fund that allots units to investors only at the time of the New Fund Offer and which has a fixed tenure. The investors can redeem their units only after the completion of the tenure of the scheme.
Bonds that can be converted into common stock of the company at the option of the holder.
The portion of net income earned by a company that is distributed among its shareholders. It is usually declared as a percentage of the paid-up value or face value of the share. This pay-out is not guaranteed. The amount you receive may vary from company to company and year to year.
It is a temporary reversal of trend, usually negative, in share prices. This could be a decrease following a consistent rise in prices or an increase following a consistent fall in prices.
A short-term drop in stock market prices is generally viewed as bringing overpriced stocks back to a level closer to companies’ actual values. A healthy market will correct from time to time.
A loan raised by a company, paying a fixed rate of interest and which is secured on the assets of the company. Interest on debentures must be paid by a company whether it makes a profit or not. If the debenture holders do not get paid, they can legally force the company into liquidation to realise their claims on the company’s assets.
Shares that are in the electronic form is called dematerialised shares or demat shares. Trading dematerialised shares is demat trading. Dematerialisation is the process by which shares in the physical form are cancelled and get credited them in the form of electronic balances, which are maintained at a depository.
It is Earnings per share, the amount of corporate earnings available to common stock shareholders. In other words, EPS is a company’s profit divided by its number of shares. If a company earned Rs. 2 crore in one year and had 4 crore shares of stock outstanding, its EPS would be Paise 50 per share.
The ownership interest of common and preferred stockholders in a corporation.
Equity Investments or Equities are those shares issued by a company which represent ownership in the company. Common and preferred shares are usually called equity stock.
It is Employee Stock Option (Ownershop) Plan, that encourages employees to buy the stock of their employer. ESOP gives to an employee shares of stock in the company as a deferred compensation benefit.
Initial Public Offer (IPO)
When a company offers its shares to the public for the first time, it is known as an Initial Public Offer.
New Fund Offer (NFO)
When a mutual fund offers units of any of its schemes to the public for the first time, it is known as a New Fund Offer.
Open-ended Mutual Fund
Mutual funds which are open throughout the year for sales and repurchase. Investors can redeem their units on all working days.
Security Transaction Tax (STT)
A tax on any purchase or sale of securities on any stock exchange in India.
The method of predicting future stock price movements based on observation of historical stock price movements in the market.
Arbitrage : Business of buying in one exchange and selling in another to take advantage of price differences.