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what are important Stock Market Terms
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what are important Stock Market Terms

what are important Stock Market Terms

what is Stock Market :

A stock Market is place where buying and selling of stock takes place now days due to advancement in technologies buying and selling of stock takes place any where in india and also from foreign countries there is no need to physical presence in exchange in NSE and BSE.

FAIR MARKET VALUE

The current worth of an assets or the price the assets would bring if sold on the open market

DEMAT ACCOUNT

is an account offered by a bank in its capacity as a depository participant. The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments. It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty, avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses.

what are Commodities

Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchange.

what are Back end Load

Sales Charges paid when selling a mutual fund (aka deferred load)

what is Bid :

The highest price a buyer is willing to pay for a stock. When combined with the ask price information, it forms the basis of a stock quote.

Stock : is nothing is but ownership of the company dividend  into small part and each part is called as stock.A person carrying a stock of a company  holds that part of ownership in that company.

what do mean by Call Money

CALL MONEY :

is the money loaned by a bank or institution which is repayable on demand .Unlike term loan where there is payment schedule in call money does not have to follow a fixed schedule and brokerages use call money as short term source of funding.

Bull Trap

A false signal that indicates that the price of stock or index has reverse to an upward trends but ultimately prove to be wrong.

Large Cap

are companies having market capitalization of stock in BSE 100 index for instance ranging from Rs 200 bn to Rs 3500 bn

Marketable Securities :

Stocks and other negotiable instruments which can be easily brought and sold on either listed exchange or over the counter market.

Dalal Street : A street in Mumbai India where the mumbai Stock exchange building is located.. A street paved with hopes and broken dreams.

Auction :

A mechanism used by the Stock Exchange to fulfil its obligation to the buyer of a security. It is done when the seller is unable to deliver the script sold by him. The security in question is offered by a member who has ready possession of the script.

Bull

An operator who expects the share price to rise and takes a position in the market to sell at a later date.

Breakout

A technical analysis term meaning a stock price has moved above or below a previous trading range.

BSE Sensex

A stock index (one of many) commonly used as an indicator of changes in the general level of the stock prices in India .In this index, there are 30 diversified stocks traded on the Mumbai Stock Exchange which are thought to be representative of the market in general.

Call /Notice-Money Market

Call/Notice money is the money borrowed or lent on demand for a very short period. When money is borrowed or lent for a day, it is known as Call (Overnight) Money. Intervening holidays and/or Sunday are excluded for this purpose. Thus money, borrowed on a day and repaid on the next working day, (irrespective of the number of intervening holidays) is “Call Money”.

 

Forex Market –

The Forex market deals with the multicurrency requirements, which are met by the exchange of currencies. Depending on the exchange rate that is applicable, the transfer of funds takes place in this market. This is one of the most developed and integrated market across the globe.

Credit Market – Credit market is a place where banks, FIs and NBFCs give short, medium and long-term loans to corporate and individuals.

Money Market Instruments:-Money Market Instruments The money market can be defined as a market
for short-term money and financial assets that are near substitutes for money. The term short-term
means generally a period upto one year and near substitutes to money is used to denote any financial
asset which can be quickly converted into money with minimum transaction cost.
Some of the important money market instruments are briefly discussed below;
1. Call/Notice Money
2. Treasury Bills
3. Term Money
4. Certificate of Deposit
5. Commercial Papers

who are BROKERAGES FIRM

BROKERAGES FIRM :  are institution who’s main business is to facilitates buying and selling of financial securities.Brokerage firms have list  of clients who trade public stock and other securities usually through companies firm’s agent stock brokers.

what are Mid Cap companies in india

Mid Cap are the companies with market capitalization between 100 crores to 1000 crores.

Although, there is no fixed definition of a large-cap company in India, in the international arena companies with market capitalization of more than USD 2-billion are regarded as large caps. That implies that a large-cap company is one with a market cap of more than Rs 8,000 crore. Market capitalization is calculated by multiplying the total number of shares issued by the company with price per share. For instance, if ABC Limited has issued 1 lakh shares in the market and each share has a cost of Rs 250, it’s market capitalization will be: 1-lakh shares x Rs 250 = Rs 25 crore.<br><br>Large Cap companies are generally included in sensex or nifty index and are generally blue chip companies. Investing in these companies is generally a safer investment option since these companies have consistent track record of performance over a consistent period of time and proved the ability to succeed over hiccups that come up during their initial years of operation. Of course there are some sectoral changes do affect returns in these shares. Few common such examples are Cipla, Ranbaxy, Infosystech, HLL which have delivered negative return in past six months because of changed economic environment (rupee hardening, drug policies etc). But the moot point is, if you continue to hold these shares, you would one day recover your costs. However, the cost of holding or blockage of funds in the meantime could be a factor. On the other hand, there are innumerable examples, where a small cap or mid cap share has never, not even after years, has recovered to previous high level

PRIME BROKERS

are providers of back-office administration and stock lending for hedge funds.

PLUG

is a variable that handles financial slack in the financial plan.

PERSONAL EQUITY

is that portion of equity ownership that is held to ones own benefit or invested as an integral part of the assets of a legal entity.

PORTFOLIO

is a term for describing all the investments that an entity owns. A diversified portfolio contains a variety of investments.

who are Analyst

Someone typically working for brokerage house who publishes buy/sell/hold recommendation and earning forecast for a stock.Buy site analyst work for institutional buyers and sell side analyst work for the brokerage.

what is Annual Report  :

A publication including financial statement and report on operation issued by the company to its shareholders at the company’s fiscal year end.

Corporate Bond :

DEBT instrument issued by a private CORPORATION, as distinct from one issued by a government agency or a municipality.

Primary Earnings Per Share :

Earnings available to COMMON STOCK divided by the number of common shares OUTSTANDING.

COLLATERAL TRUST BONDS :

Bonds secured by pledge of securities such as stock and bonds of other companies.

DEMAT ACCOUNT is an account offered by a bank in its capacity as a depository participant. The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments. It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty, avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses.

FACE VALUE :-

The amount of money indicated to be paid exclusive of interest or discount.

Share :

The company capital can be divided into different units with a definite value called as share.Holders of them of the company is known as shareholder.Its entitled its holders (shareholders ) to have equal claim in company profit and obligation for company loss or debts.
Shareholders received a physical paper or stock certificate that indicates they own x number of share in the comapany.
Two types of them.
1 Ordinary  share : It entitled the shareholder to share in the profit of the company when its happen and entitled to participate in companies annual general meeting and others meeting.
2. Preference share : Company stock with the dividend to be paid out before common stock dividend are paid out.

Equity is part of company also known as stock or share .when a buy a share of a company you also buy part of the company . A company shareholders and stockholders also have equity in the company.

There are two basic types of shares that any company issues:

A. Equity Shares

Both public and private corporations issue equity shares. Equity shareholders are the owners of a company and initially provide the equity capital to start the business.
Equity share ownership in a public company offers many benefits to investors. The following are some of its main advantages:

· Capital appreciation
· Dividends
· Voting privileges
· Liquidity – shares can easily be bought or sold
· Dividend tax credit and capital gains tax

There are also a few drawbacks of owning equity shares. Although part owners of the business, common shareholders are in a weaker position. Senior creditors, bondholders and preferred shareholders have prior claims on the earnings and assets of a company. While interest payments are guaranteed to bond holders, dividends are payable to shareholders at the discretion of the directors of a company.

B. Preference Shares

A preference share is a type of share capital that generally enables shareholders to fixed dividends ahead of the company`s common shares and to a stated rupee value per share in the event of liquidation. Typically, the preferred shareholder occupies a position between that of a company`s creditors and its common shareholders.
As preferred shares have characteristics of both debt and equity, they provide a link between the bond and common equity sections of a portfolio. One shortcoming of preferred shares is that many are non-voting. However, after a specified number of preferred dividends are withheld, voting rights are usually assigned to preferred shareholders.

Equity 

it may be defined as the residual interest in the asset of an entity that remain after deducting its liabilities.Thus the owner equity is the difference between the enterprise assets and its liabilites .The owner equity of a company is called shareholder’s equity.The component of it include share capital premimum reserves etc.

EXCHANGE RATE is the rate at which one currency can be traded for another.

Financial analysis of a company is analysis of a company’s financial statement, usually by accountants or financial analysts.It refers to the process of determining financial strength ans weakness of the firm by studying the relationship between the item of the balance sheet,profit and loss account,and other operative data.

Mayers says “Financial statement analysis is largely a study of relationship among the various financial factor in a business a disclosed by a single set of statement and a study of the trend of these factor as shown in serious of statement.

Th e purpose of such analysis is to diagnose the information contained in the financial statement based on which one can judge the profitability and financial soundness of the firm.

Financial analyst also analyses the financial statement with various tools of analysis before drawing conclusion about the financial statement with various tools of analysis before drawing conclusion about the financial health of an enterprise .The purpose of the analysis and interpretation of financial statement is essential to bring out the mystery behind the figures in financial statement.

EQUITY SHARE are those share which do not carry any specific rate of dividend can vary over the period

Equity share commonly referred to as ordinary share also represent the form of fractional or part ownership in which a shareholder as a fractional owners undertakes the maximum entrepreneurial  risk associate with the business venture.

The holders of the such share are the members of the company an have voting rights.

A company may issue differential right as voting ,payment of dividends etc.

Plain and simple, equity is a share in the ownership of a company. Equity represents a claim on the company’s assets and earnings. As you acquire more equity, your ownership stake in the company becomes greater. Whether you say shares, equity, it all means the same thing.

Features of Equity Shares :

  • Right to Income:The equity investor have residual claim to the income of the company.the income left after satisfying the claim of all other investors belongs to equity shareholders.this income is purely profit after tax minus preferred share dividend.The income of equity share may be retained by the company or paid out as dividend.
  • Equity earning which are retained in firm tend to increase market value of equity share and earning distributed as dividend provided current income to equity shareholders.

 

  • Right to control : equity shareholders are owners of the firms therefore they can elect board of directors and have right to vote on every resolutions passed before the company.The board of director select the management and management control the operation of the firms.Hence equity shareholders indirectly control the operation of the firms.

 

  • Preemptive right :enable existing shareholders to maintain there proportional ownership by purchasing the additional equity shares .
  • Right in Liquidation :Equity shareholders have residual claim over the assets of the firms in the event of liquidations.

PRIMARY MARKET is the first sale of a newly issued security. Those securities are purchased in the primary market. All subsequent trading of those securities is done in the secondary market.

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