Now I remember the time when I entered the stock market there were a lot of confusing terms which is repeatedly used like bulls beards market capitalization. Sensex, nifty, IPO, etc.This is terms for stock market.
10 Terms for stock market
1. Share
Share is part ownership of a company and represents a claim on a company's assets and earnings so let's say if you own a share of a company then you are also the owner in the profit and loss of the company and its assets like buildings patents copyrights etc, and as you acquire more stock your ownership stake in the company becomes greater.
For example, the Reliance industry which is managed by Mukesh Ambani group has around 620 crores shares and out of 620 Crores shares around 292 crores shares are owned by the promoters and promoter groups that is by Mr. Mukesh Ambani and his family. Now if you buy one share of Reliance industry then you are won by 6 crore owner of a company now this is very less but if you keep on buying more shares let us say from one serial by ten hundred thousand lakhs then your ownership in the company increases and you can see that the promoters that are Mukesh Ambani group they are owning around 292 crores out of 620 crores shares so they will have won on 47-48 percent stake in a company but if you can buy more and more share of a company then your claim in a company will also increase so basically a share is part ownership in a company.
2. Shareholder
The shareholder is an individual institution or cooperation that legally owns one or more shares of stock in a public or private corporation. For example I own 20 shares of Hindustan Unilever so I am a shareholder of Hindustan and similarly if you buy a share of Tata Motors. All the people who own the shares of a company are shareholders.
3. Stock exchange
A vegetable market where buyers and sellers meet to buy and sell vegetables, a stock exchange is also a place where the stock buyers connect with sellers to buy and sell stocks.
For example, as I said I own 20 shares of Hindustan Unilever and if I want to sell those 20 shares I have to go to a stock exchange and someone else wants to buy the shares of Hindustan Unilever so he can connect with me to buy the stocks of Hindustan Unilever over the stock exchange. Now an important concept to understand here is that in a vegetable market the market doesn't own the vegetables and similarly, stock exchange also does not own the stocks are owned by the investors that are the sellers and similarly after they have sold the stocks it will be owned by the buyer. The stock exchange doesn't own any share it is owned by the buyers and sellers and investors. There are two big stock exchanges in India first is Bombay Stock Exchange BSE and second is National Stock Exchange NSE however they are not the only two stock exchanges there are also other stock exchanges like Calcutta Stock Exchange and overall there are around 17 stock exchanges in India but two of the most popular are BSE and NSE.
4. IPO - Initial Public Offer
It is also called going public now when a privately listed company offers its shares the first time to the public to enter the stock market it is called IPO. For example companies like Flipkart, they started very small as a start-up and now they are growing bigger and if they want to enter the stock market and sell their stocks to the public then they have to offer IPO that is they have to go public and there are a lot of reasons why a company offers its IPO. One of the biggest reasons is to raise funds. Now by going to the stock market a company can meet millions of investors and this is one of the best ways to sell the shares. If the company wants to get rid of their debt. For example let's say initially to grow a company took a lot of debt from banks or other private lenders and now they want to get rid of those tips so they can offer shares to the public get the money from them.
5. Primary Market
It is also called the new issue market. It is a market where new shares are issued and public purchases directly from the company usually through an IPO. For example Paytm goes public next year or after five years so it has to go public through primary market and they have to offer these shares for the first time to the public and here the company gets the amount on the sell. If sell their 50 lakh shares to the public so all the money that they get by selling the shares will get in the account of the company. The primary market is a new issue market beside the company that offers new additional shares in the future so again these new shares should be offered to the primary market only.
6. Secondary Market
It is a place we have formally issued shares that is securities are traded and security market involved purchasing and selling shears among investors, so here the company has nothing to do with the secondary market. If a company has sold the shares then the investors who have bought this year they can sell and buy-sell the shares among themselves and the money that you get from selling the shares gets credited in the account of the investors. So basically once a company offers its shares through IPO it goes to the primary market and after that it is traded among the investors or public through the secondary market and both these occur only in the stock exchange. Here in the secondary market brokers and other intermediates. A broker or a stockbroker is an individual or organization who is registered member of the stock exchange and are given license to participate in the security markets in the place of clients so if you want to buy a share you do not need to go to the stock exchange and nowadays using online brokers you buy and sell stocks using your mobile. Now to trade in the Indian Stock Exchange you need to have a profit that is you need to open a brokerage account.
7. Demat Account
This is again one of the most frequently used terms. Demat is the short form of the dematerialized account and it is similar to your bank account just as money is kept in your bank saving account similarly stocks that you have bought kept in the demat account. In the earlier times people used to have paper certificates for stocks so that is when you buy the stock you will get a stock certificate but nowadays everything is in the dematerialized form that is electronic so whenever you buy a stock the Shares get credited in your demat account. Whenever you sell the existing stocks this stock will get debited from your Demat account.
8. Trading Account
A trading account is a medium to buy and sell shares in the stock market in other words it is used to play buy and sell orders for the share in the market. You want to buy shares of Tata Motors so here you have to specify how many shares you want to buy 100,000 and similarly, at what price you want to buy more rupees 180, 190, 120 and all these details can be filled using the trading account. If you want to trade in Indian stock Exchange you need to have a trading and d-met account and you can open all these accounts with a broker like Kotak securities or ICICI direct or any other broker like Zerodha, Upstox that you prefer.
9. IntraDay
This is one of the most frequently used terms in the Indian stock market you might also have heard about intraday traders. When you buy and sell this year on the same day then it is called intraday trading.
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| Trading chart |
You buy stock in the morning at 9:30 and sold the stock within one hour let's say at 10:30 so it is called intraday trading and these shares are not purchased for investing but to get profit. You might already know that stock prices fluctuate, a prior stock is fluctuating and at 9:30 its prices rupees 100 and at 10:30 its price moves to rupees 102 so if you buy a stock at rupees 100 and sale at rupees 102 you can make a profit of rupees 2 just within one hour so that's what intraday traders do they buy a stock and sell the stock in the same trading session. When you buy a stock and hold it for more than one day it is called delivery. Now it doesn't matter whether you sell the stock tomorrow after one week six months or after five years. If you hold a stock for more than one day then it is called delivery so two of the most popular type of trading is intraday trading and delivery trading for the long term investors who invest for a long time be our delivery traders.
10. Bull Market
This term is used to describe the scenario of a market. A bull market is when the share prices are rising and the public is optimistic that the share prices will continue to rise.
For example, a company's price is continuously rising for last four or five months so you can say that stock is in the bull face or pull market so this is a scenario in the market and when the people are optimistic everything is doing good economics good doing better and stock prices keep on rising then this scenario is called bull market on the contrary. when the share prices are falling and the public is pessimistic about the stock market then it is called a bear market. For example if the price of a specific company is continuously declining for the last 3-4 months then it can be said as a bear market. Now here the people are fearful and think that the market will continue to fall and hence they start selling their stocks. However an important point to mention here is that no market can last forever, bulls and bears are part of a market and a bull is always followed by a beer and a bear market is always followed by a bull market so that's all.
If you know more about of terminology for the share market. clickhere
Thank You.
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