Term | Definition |
In The Money(ITM) | An “in-the-money” is a term used in options trading to describe a situation where the option’s strike price is favorable to the current market price of the underlying asset, resulting in potential value for the option holder. These often have intrinsic value, meaning there is a realizable gain if the option is exercised immediately |
Income Distribution Cum Capital Withdrawal (IDCW) Plan | An IDCW plan in a mutual fund is a type of scheme where a portion of profits and earned are distributed to investors at regular intervals in form of cash. This plan is suitable for investors looking for regular income. |
Income Distribution Cum Capital Withdrawal (IDCW) Reinvestment Plan | An IDCW plan in a mutual fund is a type of scheme where a portion of profits and dividends earned are distributed to investors at regular intervals in form of units of the same fund. |
Income Statement/Profit & Loss Account | A financial statement that shows a company’s revenues, expenses, and net income over a specific period. |
Index | An index measures the price performance of a basket of securities (equities, bonds, etc). |
India Vix | India VIX, or the India Volatility Index, measures expected market volatility based on Nifty 50 index options, acting as a “fear gauge” to assess investor sentiment and market risk. The higher the India VIX, more volatile the NIFTY is expected to be. |
Industry Analysis | Evaluating the performance and trends of a specific sector or industry to identify investment opportunities. |
Industry P/E | It is a metric to judge the average valuation of companies within the specific industries. Comparing industry P/E with company P/E helps investors judge whether the stock is relatively cheaper or expensive to its peers. |
Inflation | The rate at which the general level of prices for goods and services is rising, eroding purchasing power. |
Insider Trading | Insider trading refers to trading a company’s securities by insiders based on material information that is not publicly available. Insider trading is considered unfair and illegal as the insiders stand to make unfair gains at the cost of outsiders to the company. |
Insolvency | Insolvency is a state of financial distress in which a business or person is unable to pay their bills. This can lead to legal action and selling of assets to repay debts. |
Interest Rates | The cost of borrowing money or the return earned on savings, impacting investment decisions. |
Intraday trading is style of trading in which buyers or sellers of a security settle their trades before the market closes on that particular day itself. | |
An Initial Public Offering (IPO) refers to the process of a company issuing to the public in to get listed on the stock exchange. | |
Issue Price | The issue price of a security is the price at which they are offered for sale when they first become available to the public. |
Kagi charts | They are constructed by drawing vertical lines, known as “kagi lines”, to represent price action. Kagi charts ignore time and only focus on price changes, with each line representing a specific price range. When the price of the asset surpasses the top of the previous kagi line, a new bullish line is drawn, and when the price falls below the bottom of the previous line, a new bearish line is drawn |
Know Your Customer/Client (KYC) | KYC is a required process for financial institutions to verify a person’s identity before offering financial services. It helps prevent fraud, money laundering, and other illegal activities. |
Large-Cap | As per SEBI, large-cap companies are those firms ranked between 1 and 100 by full market capitalization. |
Last Traded Price () | It is the price at which the most recent trade of a particular security took place on a stock exchange. |
Level Playing Field | These are policy standards which are applicable to all the participants involved in a operating business in a particular sector of economy. No special treatment is provided to anyone in terms of exception to law, etc, |
Leverage | In finance, leverage is use of borrowed capital for any investment, with an expectation that the profits made are greater than the interest paid. |
Liability | A liability is a responsibility or debt that an individual or company owes to someone else due to past transactions or obligations. For eg: If you take a loan from any bank then the loan amount is a liability upon you, while for the bank it is an asset. |
Limit Order | A limit order is a buy or sell order punched on an exchange with a fixed price, only when the price criteria is met the order goes through and the transaction gets completed. For Eg: If you want to buy 50 shares of XYZ at ₹500 and it is trading at ₹505, then your buy order will execute only when the stock price reaches ₹500 else the order will get canceled at the end of the day. |
Line charts | They are a type of financial charts created by plotting the closing prices of an asset on a graph and connecting them with a line. |
Fund | Liquid funds are debt funds that invest in fixed-income securities such as certificates of deposit, treasury bills, commercial papers, and other debt securities that mature within 91 days. |
Liquidation | Liquidation is the process of converting all the security in your entire portfolio or a part of it into cash. |
Liquidity | Liquidity refers to the ease with which an investor can buy or sell a particular asset without changes in its price. |
Liquidity Ratios | Financial ratios that measure a company’s ability to meet its short-term obligations, such as the current ratio or quick ratio. |
Listing | Listing is the process of price discovery of a stock by selling its shares to general public and getting it up on the stock exchanges. |
Lock-In Period | The lock-In period is a period of time during which the security held by an investor cannot be sold to anyone else. For example: Certain mutual funds have a lock-in period before they can be sold. |
Long-Term Capital Gain Tax | LTCG tax or long term capital gains tax is a tax applicable on profits accrued due to the sale or purchase of securities which are held for more than certain specified period. |
Low Price | It refers to the lowest price at which a particular security was traded on an exchange during a specific timeframe. |
Lower Circuit | Lower circuits refer to the lower limit below which the price can not go on the current trading day. They are calculated as a percentage of the previous closing price. For a stock to hit the lower circuit, the current investors must not be willing to buy even at the lower circuit price, while various investors want to sell at that price. |
Lumpsum | Lumpsum investment refers to putting big amount of money into an investment all at once, instead of spreading it out over time like systematic investment plan (SIP). |
Management Fee | A management fee is a charge levied by an investment manager for managing an investment fund. The management fee compensates the managers for their time and expertise in managing the portfolio. |
Management Team | The group of executives and leaders responsible for making strategic decisions and running a company. |
Margin | Margin trading is borrowing money from a broker to purchase securities or equity shares. |
Margin Call | Margin call is an intimation by broker when an investor/trader needs to add additional funds in their trading accounts. This is to make sure investors have enough funds to keep their trades open and not get automatically closed. |
Mark-To-Market | Mark-to-market is a system of valuing an asset based on its current market price in real time. |
Market Cap | Market cap or market capitalisation is the market value of a company calculated by multiplying its price by its number of outstanding shares. The market cap of a company is used as an indicator of its size. Companies are often divided into large-cap, mid-cap and small-cap categories based on their market capitalisation. |
Market Rate | It is the current price of any security which is trading in secondary market on realtime basis |
Market Sentiment | It refers to the outlook of traders and investors towards market or an asset, and can be described as bullish (positive), bearish (negative), or neutral (uncertain). |
Market Trends | The general direction of the stock market or a specific industry, indicating potential opportunities or risks. |
Mid-Cap | As per SEBI, mid-cap companies are those firms ranked between 101 and 250 by full market capitalization. |
Moat | When we say a business has a good moat, we are saying that it has a high ability to protect its market share and set them apart from competitors. |
Momentum | It refers to the rate of increase of an asset’s price over a specific timeframe. |
Momentum Stocks | Momentum stocks are stocks which show a high rate of change in price over a period of time. A higher rate of change of price help investors determine the strength of a trend and invest in these stocks to gain profits. |
Money Market | The money market is a type of financial market where short-term borrowing and lending of funds take place. It includes various instruments like Treasury bills, commercial paper, and certificates of deposit etc. |
Mortgage | A mortgage is a contract with a lender that lets them take a borrower’s property if they don’t pay back the money borrowed with interest. |
Mortgage-Backed Securities | A mortgage-backed security is a type of asset-backed security which is secured by a mortgage or collection of mortgages. The mortgages are securitized and packaged, such that investors can buy. |
Moving Average | A technical indicator that smooths out price fluctuations by calculating the average price over a specific period of time. |
Moving Average Convergence Divergence (MACD) | MACD is a technical indicator that measures the difference between two exponential moving averages, revealing potential shifts in momentum and trend direction in underlying security. It helps traders identify bullish and bearish signals. |
Multi Commodity Exchange (MCX) | MCX or Multi Commodity Exchange is an Indian commodities exchange that deals in the trading of commodity derivatives. |
Multibagger Stocks | Multibagger stocks are those stocks that provide investors with returns multiple times higher than the cost of investing in them. Coined by Peter Lynch, a prominent investment manager from the 80s and 90s, the term refers to stocks that yield exceptional returns. |
Municipal Bonds | Municipal bonds (“munis”) are debt securities issued by state and local governments. |
Mutual Fund | A mutual fund is a fund that collects money from a number of investors and invests the same in equities, bonds, money market instruments and/or other securities. These funds are managed by registered professionals with expertise in capital markets. |
Nasdaq | Nasdaq Stock Market is an American stock exchange based in New York City. It is ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange. NASDAQ Index is the benchmark index of this exchange and mainly consists of technology stocks. |
National Stock Exchange (NSE) | The National Stock Exchange of India (NSE) is one of India’s 2 major stock exchanges. In addition to facilitating the trading of stocks, NSE also facilitates the wholesale debt market and the cash market segment. |
Net Asset Value (NAV) | NAV is the value of one unit of a mutual fund scheme which an investor can invest in. The value of NAV changes based on the value of the underlying assets held in the mutual fund scheme and helps in tracking its performance. |
Net Income | The profit earned by a company after deducting all expenses, taxes, and interest. |
New York Stock Exchange (NYSE) | NYSE is one of the largest stock exchanges in the world. It is based in lower Manhattan District of New York City in USA. |
NIFTY | NIFTY 50 (commonly referred to as just NIFTY) is NSE’s benchmark index made up of 50 companies listed on the NSE and is meant to reflect the overall market conditions. It was launched in 1996. |
NSDL | National Securities Depository Limited (NSDL) is one of the 2 depositories in India. Depositories enable the holding of securities in dematerialised form and transaction of securities. The company describes itself as a market infrastructure institution (MII) and provides services to exchanges, clearing corporations, depository participants (DPs), issuers, and investors. |
OHLC | Short for Open-High-Low-Close of a security in a given time frame. OHLC data is widely used in various forms of financial charting and technical analysis to assess price movements and trends. |
One Cancels The Other Order (OCO) | A combination of two in which the of either one automatically cancels the other. |
Open Market Operation | The buying and selling of government securities namely treasury bills, notes, and bonds by the central bank of a country. It is one of many ways through whic central bank controls the supply of money in the economy. |
Open Network for Digital Commerce (ONDC) | Open Network for Digital Commerce (ONDC) is a government initiative for promoting open networks for all aspects of the electronic or digital exchange of goods and services. With ONDC, buyers and sellers need not be on the same platform to discover each other, making it easier for customers to find products. Also, ONDC takes away the power of imposing policies from platforms and helps smaller retailers access the online marketplace. |
Open Price | It refers to the price at which the first trade of particular security took place on an exchange during a specific timeframe. |
Operating Income | Operating income is the money a company earns from its regular business operations, like selling products or services. It’s the income before deducting interest, taxes, and other non-operational expenses. |
Options | An option in finance is a contract that gives the owner the right to buy or sell a particular asset at a specified price and date. There are two kinds of options: call options and put options. |
Orders | An order is a request made to buy or sell a security. Traders and investors use different types of orders to specify the conditions under which they want the trade to be . |
Organization of the Petroleum Exporting Countries (OPEC) | The Organization of the Petroleum Exporting Countries is a cartel of 13 petroleum exporting countries. The 13 member countries account for an estimated 44 percent of global oil production and 81.5 percent of the world’s proven oil reserves. The decision of these countries on the production of crude oil moves the prices of these commodities as well as the world economies. |
Oscillator | A technical indicator used to identify potential overbought or oversold conditions in the market. DIfferent types of Oscillators such stochastic oscillator, relative strength (RSI), rate of change (ROC), and money flow (MFI) are available for use by traders. |
Out-Of-The-Money | “Out of the money” (OTM) options refer to an option contract whose strike price is unfavorable in relation to the current market price of the underlying asset. In this situation, exercising the option would result in a loss if done immediately. Traders use OTM options for various strategies, such as speculative bets on significant price movements or as part of complex option spreads. |
Overbought | It is when price has risen significantly and quickly, to a level that some investors consider higher than its fair value. |
Oversold | It is when price has fallen significantly and quickly, to a level that some investors consider lower than its fair value. |
Oversubscription | Any extra amount received by the company more than the proposed issued capital during IPO or FPO is called as oversubscription |
P/B Ratio | Price-to-book (P/B) ratio is a valuation multiple calculated by dividing the market capitalisation of a company by its book value. |
P/E Ratio | Price-to-earnings (P/E) ratio is a valuation multiple that is calculated by dividing the share price of a company by its earnings per share (EPS). |
Paid Up Capital | The part of the issued capital of a company that has been paid up by the shareholders |
Pattern | It is a recognizable and repeatable formation of price movements on a chart. It can help traders predict potential future price movements based on historical price behaviors. |
Penny Stocks | Penny stock is a term that originated in the US markets and was used to describe stocks whose prices were just a few pennies. Typically penny stocks have low market capitalisation, share prices, and liquidity. |
Pivot points | They are price levels calculated using the high, low, and closing prices of the previous trading day or a specified timeframe. It is used to identify potential support and resistance levels for the current trading day. |
PMI Index | The Purchasing Manager’s Index (PMI) is an economic indicator derived from the monthly survey of the private sector companies. PMI aims in providing information regarding the current and future conditions of a business to the decision-makers, analysts and investors of the company. |
Point and figure charts | These charts use a grid of Xs and Os to represent changes in price. The Xs represent uptrends and the Os represent downtrends, with each box on the grid representing a set price increment. |
Portfolio | An investor’s portfolio is the collection of all their investments across all asset classes, e.g. stocks, bonds, commodities, real estate, etc. Ideally, an investor’s portfolio should match their risk profile and be appropriate for the kind of goals they want to achieve. |
Power Of Attorney | A power of attorney is a written document where one person gives another person the authority to act on their behalf for certain tasks or actions. |
Pre-market open / post-market open | Pre-market open and Post-market open refer to specific time periods before and after the regular trading hours of the stock market, respectively. These extended trading sessions allow investors to place orders and react to news outside the standard trading hours. |
Preference shares | Type of shares that gives its owners right to receive dividends before common shareholders and have priority in case the company goes bankrupt and assets are distributed. |
Presumptive Taxation | Presumptive taxation is a simplified method of calculating income tax for certain small businesses or professionals based on assumed income, rather than actual detailed calculations. This helps ease the tax process for those with relatively simple financial situations. |
Price Action | Price action is about understanding how a security’s price moves on a chart, without using indicators or external factors. It includes looking at patterns, trends, and important price levels to make trading decisions. |
Primary Market | The primary market is where newly issued securities, like stocks and bonds, are sold for the first time by companies or governments directly to investors. |
Profit Margin | The percentage of revenue that becomes profit after deducting expenses. |
Profitability Ratios | Financial ratios that measure a company’s ability to generate profit, such as gross profit margin or return on assets. |
Promoter Holding | Promoter holding is a measure of equity of a company held by its promoters. It is expressed as a percentage calculated by dividing the number of shares with promoters and the total number of shares of the company. High promoter holding stocks might be considered to be safer than low promoter holding stocks as it reflects the high confidence of promoters in the company. |
Put/Call Ratio | The ratio of put trading volume divided by the call trading volume. For example, a put/call ratio of 0.74 means that for every 100 calls bought, 74 puts were bought. The Put-Call Ratio provides insights into investor sentiment, market expectations, and potential shifts in the overall market direction. |