Lesson 8 of 13 · Free
Contents
- 1 Commonly Used Jargons
Commonly Used Jargons
Your market dictionary — 30+ essential terms covering direction, mechanics, valuation, IPOs, participants, risk and return.
A mini-dictionary for the market
Every industry has its own vocabulary. Stock markets are full of it — and most of it gets thrown around without explanation in news, brokerage reports, and YouTube videos. This lesson is the cheat sheet you’ll return to whenever someone uses a term and you’re not sure.
Market direction terms
- Bull market. Sustained upward trend, typically defined as 20% rise from a recent low. Indian equity has been in a structural bull market for most of the post-2002 period, with corrections in 2008, 2020, and 2022.
- Bear market. 20% fall from a recent high. Painful but rare. 2008 was the most severe Indian bear market in living memory.
- Correction. 10-20% fall. Healthier and shorter than a bear market.
- Crash. Sudden, sharp decline. March 2020 (COVID) was a classic crash — Nifty fell 38% in 5 weeks.
- Rally. Short, sharp rise within either trend.
- Volatility. How much prices move. India VIX measures expected Nifty volatility over the next 30 days.
Trading mechanics terms
- Volume. Total shares traded in a session.
- Turnover. Total value (price × shares) traded.
- Liquidity. How easily you can buy/sell without moving the price. Large caps are highly liquid; micro caps may not be.
- Spread. Difference between best bid and best ask. Tight spreads = liquid market.
- Slippage. The gap between expected and executed price. Bigger for larger orders in less liquid stocks.
- Impact cost. How much your order itself moves the price. The Nifty methodology requires constituents to have impact cost below 0.5%.
- Circuit limit. Daily price band beyond which a stock can’t trade. 2%, 5%, 10%, or 20% depending on category.
- Upper / lower circuit. When a stock hits its daily ceiling or floor and stops trading.
Valuation terms
- Market cap. Share price × outstanding shares.
- Large cap. Top 100 stocks by market cap. Mid cap: 101-250. Small cap: 251+.
- P/E ratio. Price per share ÷ earnings per share. The most common quick valuation gauge.
- P/B ratio. Price ÷ book value per share. Used heavily for banks.
- EPS. Earnings per share. Net profit ÷ outstanding shares.
- Book value. Equity ÷ outstanding shares.
- EV/EBITDA. Enterprise value divided by EBITDA. Better than P/E for capital-intensive businesses with lots of debt.
IPO jargon
- Issue price / issue band. The price (or range) at which shares are offered.
- Listing day pop. When the stock opens above the issue price.
- Listing day discount. When it opens below.
- Oversubscription. When demand exceeds supply. Retail oversubscription of 5× means only 1 in 5 retail applicants get a full lot.
- Anchor allotment. Institutional investors who lock in a chunk of QIB shares a day before the IPO opens.
- GMP (grey market premium). Unofficial pre-listing trading. Indicative only.
Participant types
- FII / FPI. Foreign Institutional / Portfolio Investor. Buys Indian equity from abroad.
- DII. Domestic Institutional Investor — Indian mutual funds, insurance companies, pension funds.
- HNI. High Net-worth Individual. Investing more than ₹2 lakh per IPO application.
- Retail. Individual investors with applications below ₹2 lakh per IPO.
- Promoter. Original founder/owner group of a listed company.
- Public shareholders. Everyone else who owns shares.
Risk and return terms
- Beta. A stock’s volatility relative to the market. Beta 1 = moves like the market; Beta 1.5 = 50% more volatile.
- Alpha. Return above what beta predicts. The active manager’s holy grail.
- Sharpe ratio. Excess return ÷ standard deviation. Higher is better — return per unit of risk.
- Drawdown. Peak-to-trough decline in a portfolio. Maximum drawdown tells you the worst sleep night you’d have had.
- Hedging. Taking an offsetting position to reduce risk on an existing exposure.
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The Jargon Cheat-Sheet Every Investor Should Bookmark
Financial news in India is dense with three-letter acronyms that obscure rather than illuminate. Here is a working glossary of the terms you will hear daily on CNBC-TV18, ET Now and in broker reports:
| Term | Plain English | Practical use |
|---|---|---|
| Bull / Bear | Rising / falling market | Mood indicator; not actionable alone |
| Volume | Number of shares traded that day | High volume on price move = conviction |
| Delivery vs Intraday | Hold overnight vs square off same day | Tax treatment and brokerage differ |
| F&O | Futures and Options | Leveraged; higher risk, expiry-driven |
| Market Cap | Share price × total shares | Size classification: large/mid/small |
| 52-Week High/Low | Price extremes in past year | Useful for momentum and reversion |
| Beta | Sensitivity to market moves | Beta 1.0 moves with market; 1.5 amplifies |
| Lot size | Min shares per F&O contract | Determines minimum trade size |
| Margin | Capital required to take a position | Higher leverage = higher margin call risk |
| Stop loss | Automatic exit at predefined loss level | Risk management discipline |
Indian-Specific Terms You Will Hear
“Promoter pledging” — promoters borrowing against their shares (a red flag if it crosses 30-40% of holding). “Buyback” — company repurchasing its own shares to return capital. “Bonus” — additional shares to existing holders, with no cash impact. “Split” — face value subdivision (price falls proportionately). “Demerger” — separation of business units into independent listed entities. “Block deal” — institutional trade above ₹10 crore done outside the regular order book. “Bulk deal” — smaller institutional trade above 0.5% of equity. “Insider trading” — using non-public price-sensitive info, criminal under SEBI Insider Trading Regulations 2015.
FAQs — Decoding News Headlines
“FIIs net sellers ₹3,500 crore” — does it predict the next day?
FII flows are coincident, not leading, indicators. They explain past moves better than they predict the next ones. DIIs (mutual funds, insurance) have been net buyers most of the time and often offset FII outflows.
What does “SGX Nifty” or “GIFT Nifty” tell me?
It is NIFTY 50 futures traded overnight in Singapore/GIFT City. Movement there hints at the morning open in India. Above-200 point overnight move usually translates into gap-up/down on open.
What is “OI buildup” or “long unwinding”?
OI = open interest. Rising OI + rising price = new longs added (bullish). Falling OI + rising price = shorts covered (less bullish). Rising OI + falling price = new shorts (bearish). Falling OI + falling price = longs unwinding.
SEBI’s Stricter Rules on Influencer Disclosure
SEBI’s 2023 Investment Adviser Regulations amendments require any person providing securities-related advice through digital channels (YouTube, Twitter, Telegram, Instagram) to be either a SEBI-registered Investment Adviser or a SEBI-registered Research Analyst. Unregistered “finfluencers” are now liable for penalties up to ₹10 lakh per offence. Multiple high-profile cases — including the ₹17 crore Indian Stock Bro action and bans on multiple Telegram-based “premium signal” services — have shaken the unregulated tipping ecosystem. As a viewer, always check the channel’s SEBI registration number (RIA or RA) before acting on any recommendation. Free educational content (Zerodha Varsity, Groww Blog, AMFI investor pages, the NSE Academy E-learning library) is the trustworthy alternative — they educate rather than recommend specific trades.
Spotting Manipulation Through Volume
Unusual volume spikes — say 5x the 20-day average — almost always precede or accompany news. If the news is genuine (earnings surprise, regulatory approval, contract win), the volume is healthy. If no news emerges and the volume comes from “circular trading” between connected accounts, SEBI’s surveillance algorithms typically flag it within hours, often triggering price-circuit halts and investigation. Recent action against the “Anugrah” and “Anand Rathi” wholesale demat manipulation rings showed SEBI catches sophisticated schemes too. As a retail investor, your defence is simple — be cautious of any low-volume small-cap or micro-cap that suddenly trades in lakhs of shares without a corresponding news catalyst.
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