15 Basic Terms of the Stock Market (Part-3) 

1. Bullish

Refers to general uptrend in a stock or the general market. 

2. Bearish

Refers to the general downtrend in a stock or the general market. 

3.Volume

Number of share transactions done in a timeframe. 

4. Liquidity

High demand and supply readily available for a stock means there is a high liquidity. 

5. Charts

Graphical representation of the price movement of a stock. 

6. Weeks High/Low

The highest price made in the last 52 weeks(1 year) and the lowest price made in the last 52 weeks. 

7. Upper Circuit (UC) 

•An upper level for price movement in a stock to prevent huge movements & manipulation. 

•Upper circuit of F&O stocks is at +10% and it will be opened after a while. Next upper circuit will be +15% , +20% and so on. 

•For non -F&O stocks, upper circuit is fixed at pre-set levels like +5%, +10% and so on. 

8. Lower Circuit (LC) 

• A lower level for price movement in a stock is to prevent huge movements and manipulations just like upper circuit. 

• Lower circuit of F&O stocks is at -10% and it will be opened after a while. Next lower circuit will be at -15% , -20% and so on. 

• For non F&O stocks, lower circuit is fixed at pre-set levels like -5%, -10% and -20%.

9. Gap-up and Gap-down opening

• Between 9:00am -9:08 am, orders are taken by the exchange. 

• Order matching is done based on normal demand and supply and opening price is discovered. 

10. Closing Price

• Closing price of a stock might be different from the last traded price of the day. 

• Closing price of day is average price of last 30mins of trading , with weightage given to the volume. 

11. Record Date

Is the date on which all those who are on record as shareholders of the company get the benefits of corporate actions of that company. 

12. Stock Exchange

• The stock exchange provide a platform for the investors to buy or sell securities from each other. 

• Three national stock exchanges in India are :

1. NSE

2. BSE

3. MSEI

13. Issuers

Are the companies and their entities, that seek admission for their securities to be listed on the stock exchange. 

14. OCDs

• Stands for : Optionally Convertible Debentures

• Allows a bondholder to convert the bonds to equity. 

• This conversion takes place at a predetermined prize. 

• The conversion is optional - the bondholder may choose to hold the bond till maturity. 

15. Nifty 50 and Sensex

•Nifty 50 is a group of 50 largest stocks by the market capitalisation. 

• Sensex is the group of 30 largest stocks. 

 15 Basic Terms of the Stock Market (Part-2) 

1.Initial Public Offering (IPO) :

This is how companies go public and raise money from outside investors both retail and institutional. 

2. Primary Market

Refers to share transactions between the issuing company and a public investor. 

3. Secondary Market

Refers to share transactions between a public shareholder to another public shareholder. 

4. Dividend 

Company distributing a part of the profits it generated to it's shareholders. 

5. Portfolio 

• Useful for long term investment. 

• Baskets of stocks owned by the person. 

Ex: My portfolio has 10 stocks out of which 5 are mid - cap , 3 large-cap and 2 are small - cap stocks. 

6. CAGR

• Useful for long term investment. 

• Stands for : Compound Annual Growth Rate

• Use to measure the pace at which your portfolio is growing. 

Ex: NIFTY has given a CAGR of 14%  over the last many years. Our aim as an active investor should be to grow our portfolio at a CAGR greater than 15%.

7. Position

• Useful for trading purpose, a trade that we have taken. 

• Mostly used to refer to trading activity, both Intraday and Swing. 

Ex: I took a position in Reliance at 10am in the morning, which is in profits and now I am planning to hold on to the position for some more time. 

8. Trading Capital

• The entire money that you have added to trading account for trading activities. 

Ex: My trading capital is ₹1Lakh and my developed capital in the Tata Steel position is ₹25,000 , which is 25% of my trading capital. 

9. Long Position

A trade where you buy first and then sell later. 

10. Short Position

A trade where you sell first and then buy later. 

11. Square-Off

• Exiting a position. 

• You sell to square off a long position. 

• You buy to square off a short position. 

Ex:  I took a position in Tata Steel at 10am in the morning and I squared it off at 2pm.

12. Return on Investment (ROI) 

• Use to measure the returns in percentage that you could make from a trade.

ROI = Profit from a trade / Capital deployed in the trade

Ex: I took a position in Reliance at 10 am in the morning and I squared it off at 2pm. Trade gave me ROI of 2%.

13. Contract Note

Daily report of all traders placed and charges incurred in your DEMAT account. 

Ex: I checked my contract note and it showed a brokerage of ₹20 was charged for my trades. 

14. Trend

• General direction in which a stock is moving- 

1.Uptrend

2.Downtrend

3.Sideways trend

Ex: The stock is in a strong uptrend now despite of NIFTY being in downtrend. 

15. Volatility

If the market is not stable and market frequent big moves. 

Ex: The stock is bullish but also very volatile. 

15 Basic Terms of the Stock Market(Part -1)

 Basic Terms of the Stock Market(Part-1) 

We are going to introduce some of the basic terms which are widely used in the stock market. 

There are some of the most common but very important technical words, we are going to discuss below. 

1. Market segments

There are 3 major market segments:

•Cash market/Equity/Stocks.

•Derivative market (futures & options) 

•Debt/money market (bonds or debentures) 

2. Market players

There are 4 major market players:

•Promoters:

People who have control over the company affairs, directly or indirectly (founder of the company). 

•Retailers:

Individual investors who purchases securities directly from the market. 

•Foreign Institutional Investors (FIIs) :

Investors or investment funds investing in India from outside of India. 

The Government of Singapore is the largest FIIs in India. 

•Domestic Institutional Investors (DIIs) :

Institutional investors investing with their base from India. 

LIC is the India's largest domestic institutional investor. 

3. Sectors

Stocks are grouped into sectors based on their business segment. 

Their are different sectors like banks, IT companies, FMCG companies and so on. 

4. Stock symbol

Short-term used to identify a particular stock in the stock market.

 

Ex: TCS is the stock symbol of Tata Consultancy Services. 

5. Outstanding shares

Total number of shares that are issued by the company to shareholders including promoters. 

6. Public float

Total number of shares that are available for public investors to buy or sell. 

Public float = outstanding shares - locked in shares

7.Face value

Value of the company as listed in its share certificates. 

Decided during the formation of company ; does not move on a daily basis. 

Ex:  The face value of Tata steel is ₹1 although it is trading at ₹104.50 . 

8. Market value or share price

Current trading price of the share in the open market. 

Also called as Last Traded Price(LTP) or Current Market Price(C Ex: MP). 

9. Market capitalisation 

Total value of all of company issues shares. 

Basically, valuation of the company. 

Market capitalisation = current market Price(cmp) × total outstanding                                       shares

10. Large Cap Stocks

Stocks of 1st and 100th largest market cap companies. 

11. Blue Chip Stocks

Shares of the biggest large cap companies which are well recognised and have a long history of good financial performances. 

Ex: Adani Enterprises is a large cap company and Reliance is a blue chip stock. 

12. Mid Cap Stock

Stocks of 101st to 250th largest market cap companies. 

13. Small Cap Stock

Stocks of 251st largest market companies onwards. 

Ex: TVS Motors is a mid-cap stock while India Cements is a small cap stocks. 

14. Penny Stocks

Usually small cap companies with low share prices and poor financial performance. 

Ex: Dish TV is a penny because it's share price is only ₹14.25.

15. Annual Report

Comprehensive report of a company's activities and financials of the previous year. 

Mandatory requirements to be submitted to all the shareholders. 

Pre - Opening market session

 History 

Since 2010 , the National Stock Exchange (NSE) has allowed for a 15 minute pre - market or pre - open session. This helps to reduce the prove volatility right at the opening of the market. 

What is pre-opening market session

The pre-open stock trading session is conducted from 9:00 am to 9:15 am everyday as the trading session starts. It has the duration of 15 minutes. This pre - market session is conducted both in NSE and BSE. 

• Order placing

During the pre - market session for the first eight minutes, i.e, from 9:00 am to 9:08 am , orders are collected, modified or cancelled by the exchange. 

After these initial eight minutes, no orders are accepted. 

•Order matching

From 9:08 am to 9:11 am, the orders got matched. 

During this time, you cannot buy, sell, cancel or modify your order. 

•Buffer session

And in the last 4 minutes, not much movement remains. 

Facilities the transition from pre-opening to regular market session. 

Advantages 

15 minutes session from 9:00 am to 9:15 am, the heavy fluctuations in the market got absorbed. 

There is a benefit for small investors as they will guess the trend of the market when market actually opens. 

The 10 am rule in stocks

9:30am to 9:40 am , stocks that open higher or lower than they closed usually continue keep rising or falling following the trend upward or downwards according to their change in difference from their previous day close. 

For the first five to ten minutes, from 9:40 am to 10:00 am before reversing course for the next 20 minutes , conditions any major news not came at night. 

Which one is better AMO or pre-market order?

After market order(AMO) executes from 4:00pm to 9:00am. We may place amo's but they get executed at 9:15am.

Placing the pre-market order has a better chance of being executed than an AMO. 

But if you have busy schedule or an employee then for convenience you can definitely go with AMO as you can place it between 3:45 pm to 8:57 am for NSE and 3:45 pm to 8:59 am for BSE , without waiting for pre-market timing. 

Pre-Open Market on NSE

You can check the pre-open market on the official website of NSE. 

Approximately at 9:07am the site gets open and list the stocks according to their gap-up, gap-down and unch basis. 

The screenshot of the website. 

The link of the official NSE website from where you can watch the pre-opening market session is provided below. 

Pre-opening market session

You can check the changes occured in the stocks in order to predict the trend of the market.