Financial Glossary — A-Z Market Terms

The process of allocating shares to applicants in an IPO. For oversubscribed IPOs, allotment is done via lottery.

A measure of an investment's performance relative to a benchmark index. Positive alpha means outperformance.

Application Supported by Blocked Amount — an IPO application method where funds remain in your bank account until allotment, blocked but not debited.

The lowest price a seller is willing to accept for a security. The difference between ask and bid is called the spread.

Assets Under Management — total market value of assets that a mutual fund or investment company manages on behalf of investors.

A market condition where prices decline 20% or more from recent highs, typically accompanied by widespread pessimism.

A measure of a stock's volatility relative to the overall market. Beta > 1 means more volatile than market.

The highest price a buyer is willing to pay for a security. The difference between bid and ask is the spread.

Large, well-established, financially stable companies with a history of reliable performance — e.g., TCS, Reliance, HDFC.

Net asset value of a company — total assets minus total liabilities, divided by shares outstanding.

A market condition where prices are rising or expected to rise, typically with investor confidence and optimism.

When a company purchases its own outstanding shares to reduce supply and potentially increase share value.

Compound Annual Growth Rate — the rate of return that an investment would have grown if it grew at a steady rate annually.

A charting technique showing open, high, low, and close prices. Green (bullish) if close > open, red (bearish) if close < open.

Profit from selling an asset for more than the purchase price. Taxed as STCG (short-term) or LTCG (long-term) in India.

Central Depository Services Limited — one of India's two depositories that hold securities in electronic form.

Exchange-imposed trading halt when a stock or index moves beyond preset limits (upper/lower circuit).

Current Market Price — the latest trading price of a security on the exchange.

Deutscher Aktienindex — major German stock market index tracking 40 largest companies on the Frankfurt Stock Exchange.

Dematerialized account that holds securities (stocks, bonds, mutual funds) in electronic form instead of physical certificates.

A portion of company profits distributed to shareholders, usually on a per-share basis.

Annual dividend per share divided by the stock price, expressed as a percentage.

Direct Market Access — allows traders to place orders directly on the exchange order book.

Draft Red Herring Prospectus — preliminary IPO document filed with SEBI before the IPO, subject to changes.

Equity Linked Savings Scheme — tax-saving mutual fund eligible for deduction under Section 80C with 3-year lock-in.

Earnings Per Share — company's net profit divided by total outstanding shares. Higher EPS generally indicates better profitability.

Exchange Traded Fund — a basket of securities that trades on an exchange like a stock, tracking an index, commodity, or sector.

Ex-dividend date — the date after which buying a stock does not entitle you to the upcoming dividend.

Annual fee charged by mutual funds as a percentage of AUM to cover management, admin, and distribution costs.

Futures and Options — derivative instruments that derive value from underlying assets like stocks or indices.

The nominal value of a share as stated in the company's charter. Indian stocks typically have ₹1, ₹2, ₹5, or ₹10 face value.

Foreign Institutional Investor — overseas entities that invest in Indian securities markets.

Shares available for public trading, excluding promoter holdings, locked-in shares, and government holdings.

Financial Times Stock Exchange 100 — index of 100 largest companies listed on the London Stock Exchange.

Gross Domestic Product — total monetary value of all goods and services produced within a country in a period.

Grey Market Premium — the unofficial premium at which IPO shares trade before listing. Not reliable for investment decisions.

Technical pattern where a shorter moving average crosses above a longer one, considered a bullish signal.

Major stock index of Hong Kong tracking the performance of the largest companies listed on the HKEX.

A mutual fund or ETF that tracks a specific market index (e.g., Nifty 50) by holding the same stocks in the same proportions.

Trading where positions are opened and closed within the same trading day, without overnight holding.

Initial Public Offering — when a private company first offers shares to the public for purchase on a stock exchange.

An order to buy/sell at a specific price or better. Unlike market orders, it guarantees price but not execution.

Profit when an IPO lists at a price higher than the issue price on the first day of trading.

Minimum number of shares that can be applied for in an IPO or traded in F&O. Varies by stock/IPO.

Long-Term Capital Gains — profit from selling assets held for more than 12 months (stocks/MF) or 24/36 months (others).

Moving Average Convergence Divergence — technical indicator showing the relationship between two moving averages.

Borrowed money from a broker used to trade securities. Allows larger positions but amplifies both gains and losses.

Market Capitalization — total market value of a company's outstanding shares (share price × total shares).

A pooled investment vehicle managed by professional fund managers that invests in stocks, bonds, or other securities.

Net Asset Value — the per-unit value of a mutual fund, calculated as (total assets - total liabilities) / total units.

NSE's benchmark index tracking 50 of the largest and most liquid Indian companies across 13 sectors.

Japan's primary stock index tracking 225 top-rated companies listed on the Tokyo Stock Exchange.

Non-Performing Asset — a loan where principal or interest payment has been overdue for 90 days or more.

National Securities Depository Limited — India's first depository for holding securities in electronic form.

Total number of outstanding derivative contracts (futures/options) that have not been settled.

Price-to-Book Ratio — stock price divided by book value per share. Values below 1 may indicate undervaluation.

Price-to-Earnings Ratio — stock price divided by earnings per share. Indicates how much investors pay per rupee of earnings.

A collection of financial investments held by an individual or institution — stocks, bonds, mutual funds, etc.

Percentage of shares held by the company's founders, directors, and their families. Higher promoter holding often signals confidence.

Red Herring Prospectus — the final IPO prospectus filed with SEBI and ROC, containing the price band and final details.

Return on Equity — net income divided by shareholders' equity. Measures how efficiently a company generates profit from equity.

Relative Strength Index — momentum oscillator measuring speed and magnitude of price changes (0-100). Above 70 = overbought, below 30 = oversold.

Standard & Poor's 500 — US index tracking 500 of the largest US companies, widely regarded as the best gauge of large-cap US equities.

BSE's benchmark index tracking 30 of the largest and most actively traded companies on the Bombay Stock Exchange.

Systematic Investment Plan — method of investing a fixed amount regularly in mutual funds, enabling rupee-cost averaging.

Short-Term Capital Gains — profit from selling assets held for 12 months or less (stocks/equity MF). Taxed at 15-20% in India.

An order to sell a security when it reaches a certain price, designed to limit potential losses.

Trading strategy that holds positions for days to weeks, aiming to capture short-to-medium term price moves.

Tax Deducted at Source — tax automatically deducted by the payer before releasing payment. Applies to dividends, interest, etc.

Volatility Index (India VIX) — measures market's expectation of near-term volatility. High VIX = high fear/uncertainty.

Number of shares traded during a given period. High volume often indicates strong interest and confirms price trends.

A list of securities being monitored for potential investment. Used to track prices and changes without buying.

Income return on an investment, expressed as a percentage — e.g., dividend yield, bond yield.

Year-To-Date — performance measurement from the beginning of the current calendar year to present.