| Term | Definition |
| Quant | “Quant” is a term for someone who uses math and statistics to study financial markets and investments. |
| Quick Ratio | Quick ratio, also known as the acid-test ratio, is a financial metric that measures a company’s ability to cover its short-term liabilities with its most assets, excluding inventory. Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities |
| Rebalancing | Rebalancing a portfolio means making trades to keep the portfolio on track with the chosen strategy and to adjust for any strategy changes. |
| Record Date | The record date is the designated date on which an investor must be listed as a shareholder in to be eligible to receive dividend, bonus or split shares. |
| Relative Strength Index (RSI) | An indicator to see if a stock or asset is overbought or oversold, helping to understand if it might change direction soon. |
| Resistance | A price level above the current market price where selling interest is expected to emerge and prevent further price increase. |
| Return | Return refers to the profit or loss generated from an investment over a certain period of time. |
| Return on Investment (ROI) | The percentage return earned on an investment relative to its cost. |
| Revenue | The total income generated by a company through its core operations. |
| Rights Entitlement | Rights entitlement are temporary shares credited to your as a part of the rights issue of a company you hold shares in. You are eligible for and can choose to subscribe to these shares or let them lapse. They are not rights shares by themselves and are only used to apply for the rights shares. |
| Risk | Risk is the chance of an investment’s actual gain differing from the expected outcome. It includes but is not limited to the possibility of making losses. |
| Risk Management | Risk management is the identification of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities. |
| Risk Reward Ratio | The risk/reward ratio, sometimes known as the “R/R ratio,” compares the potential profit of a trade to its potential loss. It is calculated by dividing the difference between the entry point of a trade and the stop-loss order (the risk) by the difference between the profit target and the entry point (the reward). |
| ROCE Ratio | Return on Capital Employed (ROCE) is a ratio of the company’s operating profit or EBIT (earnings before interest and taxes) and total capital employed. It helps assess a company’s profitability and capital efficiency. |
| ROE Ratio | Return on equity (ROE) is a ratio of a company’s net income and shareholder’s equity. ROE is a ratio that helps investors determine whether a company is utilising its funds efficiently or not. |
| Rollover | Rollover is a way of churning the current in futures contracts to the next expiry contract by cutting the positions in current expiry contract and entering into the next expiry contract. |
| Secondary Market | Once a company’s new shares have been sold in the primary market and get listed, those shares are traded on the secondary stock market. No new shares are issued and investors buy and sell the existing shares at market prices. |
| Sector | Companies from similar industries are placed in the same sector. For example, if there are 30 companies producing chemicals, 30 companies will be placed in the chemicals sector. Similarly, if there are 20 companies producing fast-moving consumer goods (FMCGs), 20 companies will be placed in the FMCG sector. |
| Sector Funds | A sector fund is a mutual fund that invests in a specific type of industry or sector. As per AMFI they are required to invest at least 80% of investment amount in stocks of the particular sector/ theme. |
| Sensex | BSE SENSEX is BSE’s benchmark index made up of the 30 largest and financially sound companies listed on BSE. Its name is derived from the words ‘sensitive’ and ‘index’. SENSEX is meant to reflect the overall condition of the Indian stock market and is calculated using the free float market capitalization method. |
| Settlement Cycle | Settlement cycle refers to the time it takes for a trade on a stock exchange to be fully completed, including the exchange of ownership and payment for the securities. In India, the settlement cycle for all traded instruments is T+1 day, with T representing the trading day. |
| Buyback | Share buyback is when a company purchases its own shares from the market, reducing the total number of outstanding shares. This can lead to an increase in the value of the remaining shares and potentially enhance the earnings per share. |
| Shareholding Pattern | A shareholding pattern is a disclosure of the company’s ownership pattern of promoters and non-promoters like mutual fund houses or retail investors. Typically, shareholding patterns are presented as pie charts or bar charts with percentage annotations. |
| Short Squeeze | A short squeeze happens when investors who bet that a stock’s price will fall (short sellers) face rising prices. They need to buy back the stock quickly to limit their losses, which drives the price even higher. |
| Simple Moving Average (SMA) | A indicator that calculates the average price of an asset over a specified period of time, by adding together the prices of the asset over that time period and dividing the total by the number of time periods. It is used to identify the overall trend in the market. |
| Slippage | Slippage is the slight increase or decrease of the expected price of the stock you want to trade and the actual price at which it was executed. It can happen due to various factors like market volatility, liquidity, and order size. |
| Small-Cap | As per SEBI, small-cap companies are those firms ranked 251 or lower by full market capitalization. |
| Spot Price | The spot price is the current price in the marketplace at which a given asset can be bought or sold for immediate . |
| Square-off | Square off refers to the action of closing or exiting an open trading position. It can involve selling a bought position or buying back a sold position. |
| Standard Deviation | It measures how much the returns of a security tend to vary from its average historic returns. It helps assess the risk or volatility, higher standard deviation denoting higher variability of returns and vice versa. |
| Stock Exchange | Stock exchanges are markets where securities are bought and sold. These securities include stocks, bonds and derivatives. In India, there are 2 major stock exchanges, namely the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). |
| Stock Market Bubble | Stock market bubbles are phases in which stock prices rise well above their intrinsic values. They are often a result of speculative activities and followed by stock market crashes. |
| Stock Split | Stock split is a corporate action that involves reducing the face value of shares and increasing the number of shares. Stock splits do not affect the market value of companies, but due to the increased number of shares, the liquidity of its shares might increase. |
| Stocks | A stock represents ownership in a company. When you own stock in a company, you own a part of that company and may receive a share of its profits in the form of or capital gains. |
| Stop-Loss | It is a type of order which can be placed with your broker over an already existing open trade such that in case of the position going against the investor/user he can get out of it with minimum losses. |
| Support | A price level below the current market price of a security where buying interest is expected to emerge and prevent further price decline. |
| Systematic Investment Plan / Automatic Investment Plan | Systematic Investment Plans (SIPs) involve making a fixed periodic investment into an asset of your choice. SIPs are a well-known way of investing in mutual funds, but you can set up SIPs in various assets. SIPs play an important role in making investing accessible to a larger number of investors as they help them start small. An advantage of SIPs is that since asset prices vary and the investment amount remains constant, investors would buy more at lower prices than at higher prices. This phenomenon is known as Rupee Cost Averaging. |
| T + 1 Settlement | T+1 rolling settlement is when traded funds are settled into your account one day after the trading day (T). |
| T-Bill (Treasury Bill) | A Treasury Bill (T-Bill) is a short-term government debt obligation with a maturity of one year or less. |
| Technical Analysis | Technical analysis is a technique of studying historical price and volume data of a stock to forecast future price movements. Usually, technical analysts use chart patterns, trends, and various indicators to making decisions. |
| Technical Indicators | Technical indicators use historical price and volume data to help predict future price movements. |
| Timeframe | TImeframe of a chart is the interval when data on the chart to get updated, traders use short time frames of 5mins, 15mins, 1hour etc while long term investstors generally use time frames of days, months or years to study securities. |
| Trading | Trading involves trying to make profits from short-term fluctuations in asset prices. While an investor would hold a stock for at least a year and sometimes for decades, a trader might sell off the stock within minutes. Trading is considered riskier than investing as short-term price fluctuations can be challenging to predict. |
| Trading Range | Trading range refers to the price range within which a security’s price moves over a specific period of time. It is determined by identifying the highest and lowest prices that a security has traded during a given time period. It can be used to identify potential support and resistance levels. |
| Trailing Twelve Months (TTM) | Trailing Twelve Months (TTM) refers to the last twelve months of financial data used for measuring performance or calculating indicators. |
| Trend | The overall direction of a benchmark index or a stock ignoring minor fluctuations in prices |
| Trendline | A line drawn on a chart connecting two or more price points that can help identify the current trend in the market. |
| Underlying Security | An underlying security is a stock or bond on which derivative instruments, such as futures, ETFs, and options, are based. In most cases, the underlying security is the item which must be delivered by one party in the derivative contract and accepted by the other party. |
| Undervalued Stocks | Undervalued stocks are stocks whose current stock price is lower than their intrinsic value. Intrinsic value is the true worth of an stock, based on its underlying characteristics and potential future earnings. If a stock is undervalued, one can gain by investing in it and selling it off once it reaches its intrinsic value. |
| Upper Circuit | Upper circuits refer to the upper limit beyond 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 upper circuit, the current investors must not be willing to sell even at the upper circuit price, while various investors want to invest at that price. |
| Uptrend | An uptrend refers to a consistent upward movement in the price of a stock or market over a period of time. It indicates a positive momentum and often signifies a bullish market sentiment. |
| Valuation Analysis | Assessing the worth or fair value of a stock based on its financials, market conditions, and comparable companies. |
| Value At Risk (VAR) | Value at risk is a measure of the risk of loss for investments. It estimates how much a portfolio might lose, given normal market conditions, in a set period such as a day. |
| Venture Capital | Venture capital (VC) is a type of financing provided to startups and small businesses that have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and other financial institutions. |
| Volatility | Volatility refers to how much the price of an asset changes over time. High volatility means the price can go up and down quickly, while low volatility means it changes more slowly. |
| Volume | The quantity of trades which occurred in a security in a given period of time is volume. |
| Volume-Weighted Average Price (VWAP) | It is a trading indicator that calculates the average price of a security based on its trading volume. It helps traders understand the average price at which a stock was traded throughout the day, taking into account the volume of each trade. It is used by technical analysts. |
| Yield | Yield is the income returned on an investment, such as the interest received from holding a security. The yield is usually expressed as an annual percentage rate based on the investment’s cost or current market value. |
| Zero-Beta Portfolio | A portfolio constructed to have zero systematic risk, that is, having a beta of zero. This means that it is not affected by market movements and stays stable even if the market goes up or down. |