Want To Start Investing: Here’s Some Common Key Terms Used In Stock Market

Stock

Ownership shares in a company, including a claim on company’s earning and assets.

Share

A single unit of ownership in a company. They are sold to investors to raise capital for the company.

Dividend

A portion of a profit share of companys earnings paid to shareholders. It is a great way of creating wealth for shareholders.

Market Capitalization (Market Cap)

The total value of a companys outstanding shares, calculated by multiplying the share price by the number of outstanding shares.

Large-cap stocks

Large-cap companies are well-established businesses with a significant market share, like market caps of Rs 20,000 crore or more.

Mid-cap stocks

Mid-cap companies have market caps above Rs 5,000 crore but less than Rs 20,000 crore. Investing in these companies could be riskier as compared to investment in large-cap market companies, because mid-caps tend to be more volatile.

Small-cap stocks

Small-cap companies are relatively smaller in size and have a significant growth potential. What makes them risky is the low probability that they will be successful over time. When an economy emerges from a recession, small-cap stocks often prove to be outperformers.

Index

Index is a measure of the performance of a group of stocks, representing a particular market or sector.

Bull and Bear Market

A period of rising stock prices is known as Bull market. The common scenario is when the stock prices rise by 20% and Bear market is a period of falling stock prices. It generally happens when the stock market falls by 20% or more.

Liquidity

The ease with which an asset can be bought or sold without causing a significant change in its price.

Margin

Borrowing money from a broker to purchase securities. This feature allows the investor to purchase more stocks than they can afford.

Day Trading

It refers to a trading strategy that allows buying and selling securities within the same trading day.

Portfolio

A collection of investments owned by an individual or institution. Other than stocks and bonds, portfolio may real estate and private investments.