Share Market / Stock Market Basics

It is a place where people gather to buy and sell stocks (stocks are issued by companies).

STOCK It describe the ownership certificates of any company
SHARES It refers to the owned funds of the company and represents the capital of the company.

1. They are owned funds of the company and represent the capital of the company.
2. The holder of shares is known as shareholders (Owners) get the dividend and have voting rights.
3. Dividend can be paid to shareholders only out of profits.
4. Dividend is an appropriation of profit and so it is not allowed as deduction.
5. Security for payment is not there in shares concept.
6. Debentures can be converted into shares but not wise versa.
8. They are repaid after the payment of all the liabilities when the company windup.

Share Market Segments /Share Market Sections Details
INTRA DAY Buying and selling the share on the same day is called as intraday trading. They are purchased for profits not for investment.
DELIVERY Purchased share can be hold for more than one day is called as delivery.
OPTIONS  An option is the right to buy or sell a security at a certain price within a specified time frame.
DEBENTURES Debentures represent the debt of the company.
COMMODITIES It is a physical or virtual marketplace for buying, selling and trading raw or primary products.
1. Hard commodities:
They are typically natural resources that must be mined or extracted (such as gold, rubber and oil).
2. Soft commodities
They are agricultural products or livestock (such as corn, wheat, coffee, sugar, soybeans and pork).

Share Market Terms
Term Details
Broker A stockbroker is an individual/organization who is a registered member of the stock exchange, and  are given license to participate in the securities market in place of its clients. Stockbrokers can directly buy & sell stocks in the share market on behalf of their clients and charge a commission for this service.
Potfolio It shows the different stocks and their quantities that you are holding.
stock Exchange Exchanges act as a place where the stock buyers connect with stock sellers. There are 2stock exchanges in India- Bombay stock exchange (BSE) and National stock exchange (NSE).
Dividend When a company is in profits in which you are having shares, company distributes  the profits to its share holders  called as dividend.
BID price It represents the maximum price that the buyer/buyers are willing to give to buy a share.
Ask It is the minimum price that the seller/sellers are willing to receive to sell their shares.
Asksize The aggregate size in board lots of the most recent ask to sell a particular security.
Assets (Properties Of Company Or Person) It includes (money, securities, equipment e.t.c ) everything that is owed to the company or person. They are listed on a company's balance sheet.
Margin It means borrowing money from your stock brokers to purchase stock. That money borrowed limit is called margin.
limit Order It means to buy/sell a share with a limit price.
Market Order If you want to buy/sell a share at the current market price, then you need to place a market order.
Good Till Cancellation (GTC) Order This order can be placed when an investor is willing to buy/sell the shares at a specific price and the order remains active till it is executed or canceled.
Day Order It can be placed when an investor is willing to buy/sell shares on a particular day and the order gets automatically canceled if not fulfilled on that day.
Trading Volume It is the total number of shares being traded at a particular period of time.
Volatility It means how fast a stock price moves up or down. A lower volatility means that the share’s value does not fluctuate dramatically.
Liquidity It means how easily you can buy/sell a share without affecting the share price. A highly liquid share means that it can easily be bought or sold. A low liquid stock means that the buyers/sellers are hard to find.
Short Selling It is a practice where the trader sells share first (which he doesn’t even own at that time) and hope that the price of that share starts falling. He will make a profit by buying back those shares at the lower price. Overall, both selling and buying are done here, however, it’s sequence is opposite to the regular transactions to get the profit of the falling share prices.
Average Down It is a approach where buyers, buy more shares when the share price starts falling. This results in an overall lower average price for that share.  Its aim is to reduce the average cost per unit of the investment.
Market Capitalization It refers to the total rupee value of the company’s share.
Market capitalization= Total number of shares * present market share price.

Classification of companies based on Market capitalization
1. Large capital.
2.Mid capital.
3. Small capital.
Blue Chip Stocks Large capital come stocks are called as Blue chip stocks
Bull Market It is a market scenario where share prices continue to rise and the public is optimistic.
Bear Market When the share prices are falling the public is fearful and thinks that the market will continue to fall and hence, selling increases in this market then it’s a bear market
Annual Report It is a statement which includes financial statements, operations report, issued by a company to its shareholders at the company's in the year-end.
Public / Free Float It represents the portion of shares which are in the public investors hands of a company.
IPO It is a process where private company offers its sharers first time to the public to enter in the share market. The company selling the shares is called the issuer and will usually work with an investment bank or multiple banks to conduct the IPO.
Index/Stock Market Index It is the method of showing the Overall performance of all the companies that are listed in Stock Market with a Single number. It is used by all the Investors and Traders to understand the Present overall performance of the Market and to forecast Future of the stock Market depending on the past values of the Stock Market Index.

1. Nifty (Stock Market Index of National Stock Exchange).
2. SENSEX (stock market Index of India's Bombay Stock Exchange).

If the Current Value of Nifty is 9600.00(+40.0)(0.40%) Means nifty value is increased 40 points from the yesterday's value of 9560 and the overall percentage of market is increased by 0.40%. It doesn't mean that all the companies in the Market has increased to 0.40% but most of the Companies Profited around that value of percentage. It indicates that overall market is good. This Example is common for all the indexes i.e for SENSEX as well.

Home     Back