Ever read a stock market article and hit a wall of terms like “P/E ratio,” “open interest,” or “circuit breaker” that nobody bothered to explain?
You’re not alone. The stock market has its own language, and not knowing it can make even simple news headlines feel confusing.
This glossary is built to fix exactly that. Instead of dry, textbook definitions, every term here is explained the way you’d want a knowledgeable friend to explain it — in plain English, with context on when and why it actually matters.
Bookmark this page; whenever you come across an unfamiliar term anywhere on the internet, chances are you’ll find it here.
Basic Stock Market Terms Every Investor Should Know
Demat Account — A digital account that holds your shares, bonds, and mutual fund units electronically, similar to how a bank account holds your money. Read our full guide on how to open a demat account if you haven’t yet.
Trading Account — The account through which you actually place buy and sell orders on the stock exchange; it works together with your demat account.
NSE (National Stock Exchange) — India’s largest stock exchange by trading volume, home to the Nifty 50 index.
BSE (Bombay Stock Exchange) — Asia’s oldest stock exchange, home to the Sensex index.
Sensex — The benchmark index of the BSE, tracking the performance of 30 of India’s largest, most actively traded companies.
Nifty 50 — The benchmark index of the NSE, tracking the performance of the top 50 companies listed on the exchange.
Bull Market — A sustained period where stock prices are generally rising, reflecting investor optimism.
Bear Market — A sustained period where stock prices are generally falling, reflecting investor pessimism, typically defined as a fall of 20% or more from recent highs.
Market Capitalisation (“Market Cap”) — The total value of a company’s shares, calculated as share price multiplied by the total number of outstanding shares. Companies are often classified as large-cap, mid-cap, or small-cap based on this figure.
Face Value — The nominal or “printed” value of a share as recorded in a company’s books, which can be different from its current market price.
Circuit Breaker — A regulatory mechanism that automatically halts trading in a stock (or the entire market) if its price moves beyond a certain percentage limit in a single day, designed to prevent panic-driven volatility.
Portfolio — The complete collection of investments — stocks, mutual funds, bonds, and other assets — that an individual holds.
Dividend — A portion of a company’s profits distributed to shareholders, usually paid out periodically (quarterly or annually).
Bonus Shares — Additional shares issued free of cost to existing shareholders, in a fixed ratio to their current holding, funded from the company’s reserves.
Stock Split — When a company divides its existing shares into multiple shares (e.g., one share becomes two), reducing the price per share while proportionally increasing the number of shares held — the total value of your holding stays the same.
Trading & Order Type Terms
Buy Order — An instruction to your broker to purchase a specific quantity of a stock.
Sell Order — An instruction to your broker to sell a specific quantity of a stock you hold.
Limit Order — An order to buy or sell a stock at a specific price you set, or better — it won’t execute at a worse price than what you specify.
Market Order — An order to buy or sell immediately at the best currently available price, prioritising speed of execution over price control.
Stop-Loss Order — An order that automatically triggers a sale once a stock falls to a price you’ve predetermined, designed to limit your potential losses.
Bid Price — The highest price a buyer is currently willing to pay for a stock.
Ask Price (Offer Price) — The lowest price a seller is currently willing to accept for a stock.
Volume — The total number of shares traded in a stock over a given period, usually a single trading day; higher volume generally indicates higher liquidity and interest.
Liquidity — How easily a stock can be bought or sold without significantly affecting its price; highly liquid stocks have consistently high trading volumes.
Intraday Trading — Buying and selling a stock within the same trading day, without taking delivery into your demat account.
Delivery Trading — Buying a stock and actually taking ownership of it into your demat account, intending to hold it beyond the trading day.
Off-Market Transfer — Moving shares from one demat account to another without a formal buy/sell transaction on the exchange, such as when gifting shares or transferring holdings between family members.
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Fundamental Analysis Terms
EPS (Earnings Per Share) — A company’s net profit divided by its total number of outstanding shares, showing how much profit is attributable to each individual share.
P/E Ratio (Price-to-Earnings Ratio) — A stock’s current price divided by its EPS, commonly used to gauge whether a stock is expensively or cheaply valued relative to its earnings.
P/B Ratio (Price-to-Book Ratio) — A stock’s current price divided by its book value per share, indicating how the market values a company relative to its net assets.
ROE (Return on Equity) — A measure of how efficiently a company generates profit from shareholders’ equity, expressed as a percentage.
ROCE (Return on Capital Employed) — A measure of how efficiently a company generates profit from all the capital it employs, including both equity and debt.
Book Value — The net worth of a company (total assets minus total liabilities), often expressed on a per-share basis.
Dividend Yield — The annual dividend paid per share, expressed as a percentage of the current share price.
Debt-to-Equity Ratio — A measure of how much debt a company uses relative to shareholder equity, indicating its financial leverage and risk.
Free Float — The portion of a company’s total shares that are freely available for trading by the public, excluding promoter and locked-in holdings.
Promoter Holding — The percentage of a company’s shares held by its founders or controlling shareholders (the “promoters”), often tracked as a signal of insider confidence.
Blue Chip Stock — Shares of a large, financially stable, well-established company with a consistent track record of performance.
Technical Analysis Terms
Support — A price level at which a falling stock has historically tended to stop declining and bounce back, due to consistent buying interest at that level.
Resistance — A price level at which a rising stock has historically tended to stop climbing and reverse, due to consistent selling interest at that level.
Moving Average — The average price of a stock over a specific period (e.g., 50 days or 200 days), used to smooth out short-term price fluctuations and identify trends.
RSI (Relative Strength Index) — A momentum indicator, scaled from 0 to 100, used to identify whether a stock is potentially “overbought” or “oversold.”
MACD (Moving Average Convergence Divergence) — A trend-following momentum indicator that shows the relationship between two moving averages of a stock’s price.
Candlestick Chart — A chart format showing a stock’s open, high, low, and close prices for a given period, widely used in technical analysis to visualise price action and patterns.
Trend Line — A line drawn on a chart connecting a series of price points, used to visually identify the general direction a stock is moving in.
52-Week High/Low — The highest and lowest prices at which a stock has traded over the past 52 weeks, commonly used as a quick reference point for a stock’s recent range.
Volatility — A measure of how much and how quickly a stock’s price fluctuates; higher volatility generally implies higher risk (and potential reward).
Breakout — When a stock’s price moves beyond a defined support or resistance level, often accompanied by higher trading volume, signalling a potential new trend.
Derivatives & F&O Terms
Futures Contract — An agreement to buy or sell an underlying asset (like a stock or index) at a predetermined price on a specific future date.
Options Contract — A contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price before or on a specific expiry date.
Call Option — An options contract that gives the buyer the right to buy the underlying asset at a fixed price, typically used when expecting the price to rise.
Put Option — An options contract that gives the buyer the right to sell the underlying asset at a fixed price, typically used when expecting the price to fall.
Strike Price — The predetermined price at which an options contract can be exercised.
Premium — The price paid by the buyer of an options contract to the seller, for the rights the contract provides.
Expiry Date — The date on which a futures or options contract becomes void, after which it must be settled, exercised, or closed out.
Lot Size — The fixed, exchange-determined minimum quantity of an underlying asset that must be traded in one futures or options contract. Read more about how SEBI’s 2026 reforms increased lot sizes across major indices.
Open Interest — The total number of outstanding (not yet settled or closed) futures or options contracts for a given underlying asset, often used as an indicator of market activity and sentiment.
Margin — The amount of money a trader must deposit with their broker to enter and maintain a derivatives position, acting as collateral against potential losses.
Hedging — A risk-management strategy that uses derivatives to offset potential losses in an existing investment position.
In-the-Money (ITM) / Out-of-the-Money (OTM) — Terms describing an option’s relationship to the current market price: an ITM option would be profitable if exercised right now, while an OTM option would not be.
IPO & Primary Market Terms
IPO (Initial Public Offering) — The process through which a private company offers its shares to the public for the first time, becoming a listed company on the stock exchange.
FPO (Follow-on Public Offering) — An additional offering of shares by a company that is already publicly listed, made to raise further capital.
Issue Price — The price at which shares are offered to investors during an IPO, before the stock begins trading on the open market.
Grey Market Premium (GMP) — An unofficial, informal indicator of the premium at which an upcoming IPO’s shares are trading before their official listing, often used (with caution) to gauge listing-day demand.
Listing Gain — The profit made when a stock’s price on its first day of trading is higher than its IPO issue price.
Allotment — The process of assigning IPO shares to investors who applied, which is typically done via a lottery system when an issue is oversubscribed.
Anchor Investor — A large institutional investor who commits to buying a chunk of shares in an IPO before it opens to the general public, often seen as a signal of institutional confidence.
ASBA (Application Supported by Blocked Amount) — The mandatory IPO application process in India where your application money is blocked (not debited) in your bank account until shares are allotted.
Book Building — The process through which a company and its bankers determine an IPO’s final issue price, based on demand collected from investors within a specified price band.
Mutual Fund Terms
NAV (Net Asset Value) — The per-unit market value of a mutual fund scheme, calculated by dividing the fund’s total assets (minus liabilities) by the number of outstanding units.
AUM (Assets Under Management) — The total market value of all the investments a mutual fund (or fund house) manages on behalf of its investors.
Expense Ratio — The annual fee, expressed as a percentage of AUM, that a mutual fund charges investors to cover its management and operating costs.
SIP (Systematic Investment Plan) — A method of investing a fixed amount in a mutual fund at regular intervals. Read our detailed SIP vs lump sum comparison to understand how it works.
STP (Systematic Transfer Plan) — A facility that automatically transfers a fixed amount from one mutual fund scheme to another at regular intervals, often used to move money gradually from a low-risk fund into equity.
SWP (Systematic Withdrawal Plan) — A facility that allows an investor to withdraw a fixed amount from a mutual fund investment at regular intervals, often used to generate a regular income stream.
Exit Load — A fee charged by a mutual fund if units are redeemed before a specified minimum holding period.
Direct Plan vs Regular Plan — A Direct Plan is bought straight from the fund house with no distributor commission (lower expense ratio); a Regular Plan is bought through an intermediary/distributor, who earns a commission built into a slightly higher expense ratio.
Regulatory, Tax & Compliance Terms
SEBI (Securities and Exchange Board of India) — India’s primary market regulator, responsible for protecting investor interests and regulating the securities market.
STT (Securities Transaction Tax) — A tax levied by the government on every trade executed on a recognised stock exchange in India.
LTCG (Long-Term Capital Gains) — Profit made on the sale of an investment held beyond a specified minimum period, taxed at a concessional rate for equity. See our full LTCG and STCG tax guide for exact rates.
STCG (Short-Term Capital Gains) — Profit made on the sale of an investment held for less than the specified minimum period, taxed at a different (usually higher) rate than LTCG.
KYC (Know Your Customer) — The mandatory identity and address verification process required to open a demat, trading, or mutual fund account in India.
Depository — An institution (NSDL or CDSL in India) that holds and maintains electronic records of shares and securities on behalf of investors.
DP (Depository Participant) — An intermediary (typically your broker) that acts as the link between you and the depository (NSDL/CDSL), through which your demat account is opened and operated.
CDSL / NSDL — India’s two depositories — Central Depository Services Limited and National Securities Depository Limited — that hold Indian investors’ shares in electronic form.
IPV (In-Person Verification) — A SEBI-mandated step in account opening where your identity is verified in person or via live video, to confirm you’re a real applicant.
Nominee — A person designated by an investor to receive their holdings in the event of the investor’s death, without needing to go through a lengthy legal succession process.
Broker & Account-Related Terms
Brokerage — The fee a broker charges for executing your buy or sell orders, either as a flat fee per order or a percentage of the trade value.
AMC (Annual Maintenance Charge) — A yearly fee charged by brokers/depository participants to maintain your demat account.
DP Charges (Debit Transaction Charges) — A charge levied when you sell shares from your demat account, separate from brokerage.
Margin Trading Facility (MTF) — A facility that lets you buy shares by paying only a fraction of the total cost upfront, with your broker funding the rest. Read our full MTF interest rate comparison guide.
Contract Note — An official, legally required document issued by your broker after each trading day, detailing every trade you executed along with all applicable charges.
Tax P&L / Capital Gains Statement — A report provided by your broker summarising your realised profits, losses, and turnover for a financial year, used to file your income tax return.
Client ID — The unique identification number assigned to you by your broker upon successfully opening a trading account.
Power of Attorney (PoA) — A (now largely optional, since the introduction of alternatives like pledge-based authorisation) authorisation that historically allowed brokers to debit shares from your demat account for settlement without requiring a separate confirmation for every sale.
Frequently Asked Questions
What’s the difference between NSE and BSE?
NSE (National Stock Exchange) is India’s largest exchange by trading volume and hosts the Nifty 50 index, while BSE (Bombay Stock Exchange) is Asia’s oldest exchange and hosts the Sensex. Most stocks are listed and tradeable on both.
What’s the easiest way to remember all these terms as a beginner?
Focus first on the basic and trading-order terms (Sections 1 and 2) since those come up in nearly every article and app you’ll use. Fundamental, technical, and F&O terms can be learned gradually as you start actually using them in your own investing decisions.
Is P/E ratio the same as EPS?
No — they’re related but different. EPS is a company’s profit per share in absolute rupee terms, while the P/E ratio compares the stock’s current price to that EPS figure, helping you judge whether the stock looks expensive or cheap relative to its earnings.
What’s the difference between STCG and LTCG in simple terms?
STCG applies to gains from investments sold within a short holding period (12 months for listed equity), while LTCG applies to gains from investments held longer. LTCG on equity generally enjoys a lower tax rate and a yearly exemption threshold that STCG doesn’t get.
Do I need to know all these terms before I start investing?
No — you don’t need to memorise this entire glossary before placing your first trade. Start with the basics (demat account, trading account, market order, limit order) and build your vocabulary naturally as you encounter new terms in real trading situations.
Final Thoughts
The stock market’s vocabulary can feel intimidating at first, but almost every term boils down to a simple, logical idea once it’s explained without the jargon.
Keep this glossary bookmarked as a reference — and as you move from being a beginner to a more active investor or trader, you’ll find yourself using these terms naturally, without even having to think about it.
If you’re just getting started, pair this glossary with our guide on how to open a demat and trading account to put these terms into practice right away.