There are tons of company listed on a stock exchange, it’s very hard to track every single stock to evaluate the market performance at a time. Therefore, a smaller sample is taken which is the representative of the whole market. This small sample is called Index and it helps in the measurement of the value of a section of the stock market. The index is computed from the prices of selected stocks. Sensex is the index of BSE (Bombay Stock Exchange) and it consists of 30 companies from BSE. Nifty is the index of NSE (National Stock Exchange) and consists of 50 companies from NSE
A portfolio is grouping all the stocks that you are holding. A portfolio shows the different stocks and their quantities that you are holding. It’s important to build the best portfolio to maintain risk-reward in the stock market.
A broker is an individual/organization who is a registered member of the stock exchange And SEBI (Security Exchange Board of India) 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.
When a privately listed company offers its sharers first time to the public to enter in the share market, then it is called initial public offering.
When you buy and sell the share on the same day, then it is called intraday trading. Here the shares are not purchased for investing, and you don’t get a delivery of share.
When you buy a share and hold it for more than one day, then it is called delivery. It doesn’t matter whether you sell it tomorrow, after 4 weeks, 12 months or 20 years. If you hold the stock for more than one day, then it is called delivery.
This is a term used to describe the scenario of the market. A bull market is when the share prices are rising and the public is optimistic that the share price will continue to rise.
When the share prices are falling and the public is pessimistic about the stock market, then it’s a bear market. The public is fearful and thinks that the market will continue to fall and hence, selling increases in this market.
The bid price represents the maximum price that the buyers are willing to give to buy a share.
This is the minimum price that the sellers are willing to receive to sell their shares.
When you want to buy or sell a share at the current market price, then you need to place a market order. For example, if the market price of ‘SBI’ is Rs 240 and you are ready to buy the share at the same price, then you place a market order. Here, the order is executed instantaneously.
Limit order means to buy or sell a share with a limit price. If you want to buy or sell a share at a given price, then you place a limit order. For example, if the current market price of ‘SBI is Rs 240, and you want to buy it at Rs 235, then you need to place a limit order. When the market price of SBI falls to Rs 235, then the order is executed
Order can be placed when a trader is willing to buy or sell shares on a particular day and the order gets automatically canceled if not fulfilled on that day.
It is the total number of shares being traded at a particular period of time.
It means how fast a stock price moves up or down. A lower volatility means that the share’s value does not fluctuate dramatically.
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.
Liquidity means how easily you can buy or 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.
Market Capitalization is calculated by multiplying the total number of shares by its present market share price. It is used to define large cap, mid cap or small cap companies based on their market capitalization.
Blue Chips are a share of large, financially sound companies with an impressive record of earnings and dividends. Generally, Blue Chip shares provide low to moderate current yield and moderate to high capital gains yield. The price volatility of such shares is moderate like Reliance Industry, Tata Motors, and TCS etc.
This is the difference between the ‘bid’ and ‘ask’ price of a share. Basically, its the difference between the highest price that the buyers are willing to buy a share and the lowest price that the sellers are willing to sell their shares.
BLOCK DEAL: Block deal is a trade, with a minimum quantity of 5,00,000 shares or minimum value of Rs. 5 crores, executed through a single transaction, on the special “Block Deal window”. The window is opened for only 35 minutes in the morning trading hours.
Block Deals happen when two parties agree to buy or sell securities at an agreed price between themselves and inform the Stock Exchange. The orders in a block deal are not shown to the people who trade from normal trade window.
According to SEBI, to facilitate block deals, stock Exchanges provide a separate trading window for only 35 minutes at the beginning of the trading hours.
BULK DEAL: The Bulk deal is a trade, where total quantity bought or sold is more than 0.5% of the number of equity shares of the company. The orders in a block deal are not shown to the people who trade from normal trade window. Bulk orders, on the other hand, are visible to everyone.
Bulk deals can be transacted by the normal trading window provided by brokers throughout the trading hours in a day. Bulk deals are market driven and take place throughout the trading day.
This is an approach that investors use to buy more shares when the share price starts falling. This results in an overall lower average price for that share. For example, you bought a stock at Rs 200. Then the stock price starts falling. You bought the stock again at Rs 150 and Rs 120. Hence, the average price of your investment will be lower i.e. Rs 156.66. This is the approach used in averaging down.
A company whose shares you are holding is in profit, the company can either reinvest the profit or distribute the amount among its shareholders. This share of the profit that you get from the company is called dividend. Companies may or may not give dividends to its shareholders depending on its needs.
Trading on margin means borrowing money from your stock brokers to purchase stock. It allows the traders to buy more stocks than you’d normally be able to.