Glossary

Plain-English definitions for the terms you'll bump into across Indian market commentary.

AMC: Asset Management Company. The company that runs a mutual fund (e.g. HDFC AMC runs HDFC mutual funds).
Beta: A measure of a stock's volatility relative to the broader index. Beta > 1 means more volatile than the index.
Bid & Ask: Bid is the highest price a buyer is willing to pay; ask is the lowest a seller is willing to accept. The difference is the spread.
Blue chip: Informal label for large, established, financially solid companies.
Bonus shares: Free additional shares issued from a company's reserves to existing shareholders.
Book value: Net assets attributable to equity shareholders, per the balance sheet.
Buyback: A company repurchasing its own shares from the market, usually reducing the share count.
Circuit limit: Price band beyond which a stock cannot move in a single day. Triggers a trading halt.
CDSL / NSDL: India's two depositories — they hold shares electronically in your demat account.
Corporate action: Any event initiated by a company that affects its shares — dividends, splits, bonuses, buybacks, mergers.
Demat: Dematerialised — shares held electronically rather than as paper certificates.
Derivative: A contract whose value derives from an underlying asset (stocks, indices, commodities). Futures and options are the most common.
Dividend: A distribution of profits to shareholders, declared per share.
DRHP / RHP: Draft Red Herring Prospectus / Red Herring Prospectus — IPO disclosure documents filed with SEBI.
EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation. A proxy for cash operating performance.
EPS: Earnings per Share — net profit divided by shares outstanding.
ETF: Exchange-Traded Fund — a fund whose units trade on an exchange like a stock; usually tracks an index.
Face value: The nominal value of a share assigned at issue (often ₹1, ₹2 or ₹10). Different from market price.
FII / FPI: Foreign Institutional / Portfolio Investor. Foreign money invested in Indian listed securities.
Free float: The portion of a company's shares that are freely tradable — excluding promoter and other locked holdings.
Futures: A contract to buy or sell an asset at a fixed price on a future date.
Index: A weighted basket of stocks used to summarise market movement (e.g. Nifty 50, Sensex).
IPO: Initial Public Offering — a company's first sale of shares to the public.
Intraday: Buy and sell completed within the same trading day.
Large / Mid / Small cap: SEBI defines large cap as the top 100 companies by market cap, mid cap as the next 150, and small cap as the rest.
Lot size: Minimum number of shares per F&O contract for a given underlying.
Market cap: Share price × total shares outstanding. The market's valuation of the company's equity.
Margin: Money the broker requires you to deposit to take a leveraged or derivatives position.
MTF: Margin Trading Facility — buying shares with money borrowed from the broker.
Mutual fund: A pooled investment vehicle managed by an AMC and regulated by SEBI.
NAV: Net Asset Value — per-unit value of a mutual fund.
Options: Contracts giving the right (not obligation) to buy (call) or sell (put) an underlying at a strike price by expiry.
OTC: Over the Counter — trades arranged off-exchange between two parties.
P/E: Price-to-Earnings ratio — share price divided by EPS.
Promoter: The original founders/controlling shareholders of a company.
Pledged shares: Promoter shares used as collateral for borrowing. High pledge levels can be a red flag.
Right issue: An offer to existing shareholders to buy additional shares, usually at a discount, in proportion to their current holding.
ROE / ROCE: Return on Equity / Return on Capital Employed — efficiency ratios.
SEBI: Securities and Exchange Board of India — the market regulator.
SIP: Systematic Investment Plan — a fixed amount invested into a mutual fund at regular intervals.
Split: A corporate action that divides each share into multiple shares (e.g. 1:5), reducing share price proportionally.
Stop-loss: A pre-set exit order intended to limit loss if price moves against you.
STT: Securities Transaction Tax — a small tax on equity and equity-derivative transactions in India.
Strike price: The fixed exercise price of an option contract.
Swing trade: A trade held for a few days to a few weeks, longer than intraday but shorter than investing.
T+1: India's equity settlement cycle — trade today, settled the next working day.
Tick size: The smallest permitted price change for a given security.
VWAP: Volume Weighted Average Price — a price benchmark giving more weight to periods with higher volume.
Volatility: How much price moves over a period — often quantified as standard deviation of returns.
Volume: The number of shares traded over a period.
Yield: Annual return expressed as a percentage of price — typically dividend yield for stocks.