Glossary

Arbitrageurs

An arbitrageur is a stock market participant who tries to take advantage of the price difference of the same asset in different markets. Arbitrageurs earn risk-free returns. By buying low in one market and selling high in another, arbitrageurs also help to increase market efficiency by correcting market mispricings.

BSE (Bombay Stock Exchange)

The Bombay Stock Exchange Limited (BSE), established in 1875 and headquartered in Mumbai, is Asia's oldest stock exchange and features the highest number of listed companies globally.

Bid-Ask Spread

The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) for a security.

Daily Margin Statement

A Daily Margin Statement is a report issued by brokers to traders detailing margin requirements, available balance, utilised margin, and any shortfalls in their trading account for a given trading day. It helps traders track their margin status and ensures compliance with regulatory requirements.

Demat Account

A Demat account is an electronic account that stores your shares and other investments in digital form, making it easy to buy, sell, and manage them without physical paperwork.

Derivative Markets

Derivative Markets are financial markets where derivative instruments, such as futures, options, swaps, and forwards, are traded. These instruments derive their value from an underlying asset, such as stocks, commodities, currencies, interest rates, or indices.

Domestic Institutional Investors (DIIs)

DII (Domestic Institutional Investor) refers to Indian institutions that invest large amounts of money in the Indian financial markets.

Follow-on Public Offering (FPO)

FPO, also known as a follow-on public offering, is a process through which a listed company raises further capital by selling new shares to the public.

Hedge

A hedge is a way to protect your investment from losses by using tools like options, futures, or swaps. It helps reduce risks if the market goes against you.

Hedgers

Market participants who use futures & options to protect their open position in the underlying asset from price fluctuations in the spot market are known as hedgers.

Impact Cost

Impact cost refers to the cost incurred when executing a buy or sell transaction of a security. It depends on the liquidity of the asset.

Institutional Investors

Institutional investors are large entities like mutual funds, pension funds, insurance companies, hedge funds, banks, or endowments that invest large sums of money in the financial markets.

Liquidity

Liquidity refers to how easily an asset or security can be sold in the market without affecting its price.

Market Participants

Market participants are all individuals and institutions involved in buying, selling, and regulating securities in the stock market. They play a key role in determining price movements, liquidity, and overall market stability.

Market Phases

Market phases are recurring stages of price movement accumulation, markup, distribution, and markdown that reflect changing investor sentiment from pessimism to optimism and back.

Market Sentiment Indicators

Market sentiment indicators are tools used to gauge the overall mood of investors toward the stock market.

NSE (National Stock Exchange of India)

NSE, also known as the National Stock Exchange, was established in 1992 and is based in Mumbai. It is the 4th largest stock exchange in the world according to market capitalisation.

Primary Markets

The primary market is where new securities are issued and sold for the first time, enabling companies and governments to raise capital directly from investors.

Stock Exchanges

A stock exchange is a marketplace where shares and securities are traded transparently at prices driven by supply and demand.

Tick Size in Trading

Tick size is the smallest possible price movement of a trading instrument, like a stock, currency, or derivative.