Many of us hesitate to put money in
equity markets with fear of complex processes and ignorance to market
terminology. We would today, discuss a few handy terminologies which can make
your first step much simpler.
Primary
Market – A part of
capital market where companies raise money from common public in exchange of partial
ownership via shares of their company. It is simply explained issuing new
securities. The most commonly used routes are IPO or privately placed
securities.
Initial Public Offering (IPO): It can also be called as company's first
issue of shares to common public. It gives an opportunity to all small and
large company to raise money for their future growth and expansion or for
repaying debt.
Secondary
Market – A market
where publicly listed companies freely trade i.e. are being bought/sold by
investors among themselves via stock exchange.
Delivery
based Trading – When
you buy any stock and hold it overnight or take delivery of the same, it is
known as delivery based trading.
Intraday
trading – When you
buy or sell stock on the same day or before the market closes it is known as
Intraday trading.
Stock
Exchange –It is a
place where publicly held companies list their securities and are traded by
investors themselves or by their brokers.
Bear Market: A market in which stock prices are
falling consistently.
Bull
Market – A
situation where stock prices continuously are rising due to positive sentiments
of the economic conditions or about the company performance.
Index – It
is basically a summary of performance of commonly grouped stocks. It is created
to benchmark performance vis –a vis the individual company, earnings or even
overall economy. We come to know the vulnerability or resistance of any
particular sector towards any untold event or news.
Beta: It is used to measure relationship between stock price
and the movement of market Index.
Market
Capitalisation – It
is calculated as total number of outstanding shares multiplied by the current
market price. It determines the market value of the company. Companies are
ranked in different groups of blue chip , mid cap or small group based on of
these factors.
Blue Chip Stock: Companies that have large market
capital, good management and established good performance record are usually
termed as blue chip stocks. They are considered safe and good for investment
with good growth potential.
Close Price: The last price at which any stock
is traded on a given particular trading day.
Derivatives: It is product where the price of security
is derived from performance of underlying assets. The preferred to trade in
derivatives is Futures and Options.
Dividend: It is earnings during any
particular financial year distributed by the owners to the share holders
towards their investment. It is usually declared as a percentage of face value.
Face value: It is the cash portion of the
amount of shares held by the individual to be returned from the issuer at the
time of maturity. It is also known as par value.
Hedge: A strategy to reduce the risk of
adverse price movements of assets in different markets.
Limit Order: Any trade attempted by buyer at a
specified price rather than prevailing price is known as limit order. A limit
order gives the seller, the liberty to choose a minimum price at which he is
willing to sell and maximum price the buyer is willing to pay for it.
Price Earnings (P/E) Ratio: It is described as valuation of company's last
traded share price to its latest reported 12 months earnings per share. It is
commonly used tool to check the performance of consumer goods kind of
companies.
Stock Split: An attempt to increase the number
of outstanding shares
of a company. The purpose of any stock split is to give
accessibility to the small investors to own the share. Also the existing investors
get more benefit of future probable dividends or bonuses.
Have more queries with your share
trading, does the broker confuse you with his jargon; don’t hesitate to talk to
us at saarthifp@gmail.com for more
clarity.
No comments:
Post a Comment