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Glossary Stock Market
Arbitrage : Business
of buying in one exchange and selling in another to take advantage of price
differences.
Auction : A
mechanism used by the Stock Exchange to fulfill its obligation to the buyer of a
security. It is done when the seller is unable to deliver the scrips sold by
him. The security in question is offered by a member who has ready possession of
the scrips.
Bear : An operator who expects the share price to fall
Bear Market : A
weak and falling market where buyers are absent
Blue Chips : Shares
of financially sound, well established companies with a track record of good
growth and regular payment of dividends.
Bonus Shares : Shares
allotted to the existing shareholders by capitalising the reserves into
additional capital. When market expects a company to come out with a Bonus
Issue, the price of the shares normally goes up.
Book Closure : A
company closes its register of members for updating the records to facilitate
payment of dividends or issue of rights of bonus shares. Book closure is the
period during which this process is done and deliveries are not effected in the
clearing house.
Bourse : A
Stock Exchange
Bull : An
operator who expects the share price to rise and takes position in the market to
sell at a later date.
Bull Market : A
rising market where buyers far outnumber the sellers
Call Option : An option where the buyer gets the right to buy the underlying
security at a specified future date.
Carry Forward : Settlement
where positions are carried forward from one settlement to another settlement.
Cash Settlement : Payment for transactions done in one settlement on the due date.
Circuit Breaker : A mechanism used to restrain the market when it gets overheated. The
Exchange may relax the limit after a cooling off period of about half an hour.
Clearing House : It
is a legal counter party to both legs of every trade. The netted purchase and
sale positions of the trading Members are settled through the Clearing House.
Company Objection : In some cases, the companies send back the certificates received for
transfer citing reasons for their inability to do so. The letter sent by the
Company is known as Company Objection.
Cum Bonus : A
share is described as cum bonus when the purchaser is entitled for current bonus
Cum Dividend : A
shares is described as cum dividend when the purchaser is entitled for current
dividend
Cum Rights : A
share is described as cum rights when the purchaser is entitled for current
rights
Day Order : The quantity that remains untraded is not cancelled until the end
of the day.
Dealer : A
Dealer is a user who works on behalf of the Trading Member
Delivery Based Trading : When a share is bought or sold for the purpose of receiving or effecting
deliveries.
Dematerialisation : Process of converting a security from physical form to electronic form
Derivatives : A
financial contract between two or more parties and it is derived from the future
value of an underlying asset.
Disclosed Quantity : An order entered in the system wherein only a fraction of the order
quantity is disclosed to the market.
Dividend : Cash
payment made to the shareholders out of the profits of the company.
Ex Bonus : A share is described as Ex Bonus when the buyer is not entitled for
the Bonus. The seller remains the beneficiary.
Ex Dividend : A
share is described as Ex Dividend when the buyer is not entitled for the
Dividend. The seller remains the beneficiary.
Ex Rights : A
share is described as Ex Rights when the buyer is not entitled for the Rights.
The seller remains the beneficiary.
Expiry Date : The
date and time after which a writer of an option cannot exercise his rights.
Exposure Limit : The
limit allowed to the Broker by the Exchange or to the customer by broker. It is
the total value upto which one is allowed to hold open positions at any point of
time.
Futures Contract : An
agreement between parties for a specified asset for performance on a fixed date
in future.
Hedging : It is protecting an existing asset position from an adverse future
position. A hedger takes an equal and opposite position in the futures market to
the one he holds in the equity market.
Insider Trading : Trading
carried out by people who have access to non public price sensitive information.
Limit Order : A buy or sell order where price is specified at the time of order
entry
Long Position : A
bull position in a security
Margin : An upfront payment made by the customer to take position in the
market. His exposure limit is fixed based on the margin money brought in by him.
Mark To Market : A
notional profit or loss of a long or short position as compared to the current
market price.
Market Order : An
order where no price specification is mentioned at the time of placement
NSCCL : National Securities Clearing Corporation Limited. The Clearing
Corporation of the National Stock Exchange.
NSE : National
Stock Exchange
Offer : The price at which a share is available in the market
Offer Price : The
price at which a company offers its shares to the public through issue of a
prospectus
Order Cancellation : A facility available in the trading system where one is allowed to
cancel the order placed earlier.
Order Modification : A facility available in the trading system where one is allowed to
modify an earlier order.
Pay In : The designated day on which the members pay securities and funds to
the clearing house
Pay Out : The
designated day on which the Clearing House effects payment and deliveries to the
members
Price Band : It
sets up the upper and lower limits for a share's movement on any given day. It
is based on the previous trading day's closing price. The system will not accept
the orders that are out of bound.
Price Rigging : A
process where persons collude to artificially increase or decrease the price of
a security
Put Option : An
option where the buyer gets the right to sell the underlying security at a
specified future date.
Quote : Prices at which a share can be bought or sold
Record Date : The date on which the beneficial owner of the Corporate Benefits is
determined.
Rematerialisation : Process of converting the shares from electronic form to physical form
Rights Issue : Issue
of new share to the existing shareholders at a price which is normally lower
than the current market price of the old shares. It is issued in a fixed ratio
to the those shares which are already held.
SEBI : The Securities Exchange Board of India, the regulatory body
controlling the functioning of Stock Exchanges in India.
Stop Loss Order : An order placed with a 'trigger price'. It is placed to minimise the
losses and the order can be either for a purchase or a sale.
Volume : The total number of shares that are transacted in a scrip. It helps
in analyzing and understanding the reasons behind price |
