Stock Market Glossary

Yes. The process of reconverting demat shares to physical shares is called re-materialization. If one wishes to get back his securities in the physical form, one has to fill in the RRF (Remat Request Form) and request his Depository Participant (DP) for re-materialization of the balances in his securities account.

The total amount of funds generated by a business.

A public company that wants to raise capital can opt for a Public Issue or a Rights Issue. Oftentimes they opt for latter, followed by former. In a rights issue, existing shareholders have the right to buy a specified number of new shares of the firm at a specified price within a specified time. Usually this price is below market price.

A probable chances of investments actual returns will be reduced then as calculated. Risk is usually measured by calculating the standard deviation of the historical price returns. Standard deviation is directly proportional to the degree of risk associated.

A group of stocks that are in the same business. An example would be the “Technology” sector including companies like Apple and Microsoft.

The definition of ‘Securities’ as per the Securities Contracts Regulation Act (SCRA), 1956, includes instruments such as shares, bonds, scrips, stocks or other marketable securities of similar nature in or of any incorporate company or body corporate, government securities, derivatives of securities, units of collective investment scheme, interest and rights in securities, security receipt or any other instruments so declared by the Central Government.

The date when a securities buyer must pay for a purchase or a seller must deliver the securities sold. Settlement must be made on or before the third business day following the transaction date in most cases.

The price used to determine the daily net gains or losses in the value of an open futures or options contract.

The process that follows a transaction when the seller delivers the security to the buyer and the buyer pays the seller for the security.

A paper certificate that represents the number of shares an investor owns.

The selling of a security that the seller does not own (naked or uncovered short) or has borrowed (covered short). Short selling is a trading strategy. Short sellers assume the risk that they will be able to buy the stock at a lower price

This is the difference between the bid and the ask prices of a stock, or the amount someone is willing to buy it and someone is willing to sell it.