Stock Market Glossary

The scrips traded on BSE have been classified into various groups. BSE has, for the guidance and benefit of the investors, classified the scrips in the Equity Segment into ‘A’, ‘B’, ‘T’ and ‘Z’ groups on certain qualitative and quantitative parameters

This is used to limit your losses. You can do this by taking an offsetting position. For example, if you hold 100 shares of XYZ, you could short the stock or futures positions on the stock.

A security which has a solid record of dividend payments and offers the dividend higher than the common stocks.

An index is a benchmark which is used as a reference marker for traders and portfolio managers. A 10% may sound good, but if the market index returned 12%, then you didn’t do very well since you could have just invested in an index fund and saved time by not trading frequently. Examples are the Dow Jones Industrial Average and Standard & Poor’s 500.

An overall increase in prices for goods and services, usually measured by the percentage change in the Consumer Price Index.

A company’s first issue of shares to general public. IPOs are issued by smaller, younger companies seeking funds for expansion and growth, but large companies also practice this to become publicly traded companies.

There are two types of insider trading. The first type occurs when insiders trade in the stock of their company. Insiders must report these transactions to the appropriate securities commissions. The other type of insider trading is when anyone trades securities based on material information that is not public knowledge. This type of insider trading is illegal.

Internet Trading is a platform with Internet as a medium. Internet trading execution takes place through order routing system, which will rout traders order to exchange trading system. Thus traders sitting in any part of the world can be able to trade using their brokers Internet Trading System. The Securities and Exchange Board of India (SEBI) approved Internet Trading in January 2000.

ISIN (International Securities Identification Number) is a unique identification number for a security. India follows the norms stipulates by Association of National Numbering Agency (ANNA) which is the international body for issue of ISINs.

An order to buy or sell a share at a specified price. The order will be executed only at the specified limit price or even better. A limit order sets a minimum price the seller is willing to accept and maximum price the buyer is willing to pay for it.

This refers to how easily securities can be bought or sold in the market. A security is liquid when there are enough units outstanding for large transactions to occur without a substantial change in price. Liquidity is one of the most important characteristics of a good market. Liquidity also refers to how easily investors can convert their securities into cash and to a corporation’s cash position, which is how much the value of the corporation’s current assets exceeds current liabilities

The shares of an issuer that are traded on the stock exchange. The issuer has to pay fees to be listed in the stock exchange and abide by the regulations of the stock exchange to maintain listing privilege.