Stock market glossary

The bid is the highest price a buyer will pay; the ask is the lowest price a seller will accept. The gap between them is the spread.

Additional shares given free to existing shareholders in proportion to their holdings, funded from the company's reserves.

When a company repurchases its own shares from the market, often to return surplus cash to shareholders.

Exchange-set price bands that halt trading in a stock or index if it moves up or down beyond a defined percentage in a day.

An electronic account used to hold shares and securities in dematerialised form, removing the need for physical certificates.

A share of a company's profits distributed to shareholders, usually in cash, on a per-share basis.

The date on which a derivative contract ends and is settled. Indian index and stock derivatives expire on set weekly or monthly dates.

Derivative contracts whose value is derived from an underlying asset such as a stock, index, or commodity.

Evaluating a company's financial health — earnings, debt, and growth — to judge whether its shares are fairly priced.

A contract to buy or sell an asset at a fixed price on a future date, regardless of the market price at that time.

A basket of stocks that tracks overall market performance, such as the Nifty 50 or the Sensex.

Buying and selling the same security within a single trading day, with all positions squared off before market close.

The first time a private company offers its shares to the public for purchase on a stock exchange.

Know Your Customer — the one-time identity verification (PAN, Aadhaar, bank proof) required before you can trade or invest.

Using borrowed funds or margin to increase exposure. It magnifies both potential gains and potential losses.

An order that executes only at a price you specify or better, giving you control over the entry or exit price.

How easily an asset can be bought or sold without significantly affecting its price. Highly traded stocks are more liquid.

The minimum quantity of an asset that can be traded in a single contract, especially in derivatives and IPO applications.

The funds required to open and maintain a leveraged position. It lets traders take larger positions than their capital alone allows.

The total value of a company's shares — share price multiplied by the number of outstanding shares.

An order to buy or sell immediately at the best available current price.

A person you designate to receive the holdings in your demat or trading account in the event of your death.

Contracts giving the right, but not the obligation, to buy (call) or sell (put) an asset at a set price before expiry.

Price-to-Earnings ratio — a stock's price divided by its earnings per share, used to gauge relative valuation.

The Securities and Exchange Board of India — the regulator that oversees and protects participants in the securities market.

The process of transferring securities and funds after a trade. Indian markets settle on a T+1 basis — one working day after the trade.

Dividing existing shares into multiple shares to lower the per-share price and improve liquidity, without changing total value.

A pre-set order that automatically exits a position when the price moves against you by a defined amount, limiting downside risk.

Studying price charts and patterns to gauge market sentiment and the likely timing of moves.

The account used to place buy and sell orders on the exchange. It works alongside your demat account, which stores the securities.

The degree to which a price fluctuates over time. Higher volatility means larger and faster price swings.

The total number of shares traded in a given period — a measure of activity and interest in a stock.