Stock market terminology includes the words that you will frequently hear when you enter the stock market as a trader or investor. Understanding these commonly used stock market terms and definitions can make it much easier to understand market news, trading platforms and everyday conversations about investing and trading.

 1. Stock Market

The Stock Market, also called the share market or share bazaar, is the market where securities such as shares are issued, bought and sold.

2. Primary Market

The Primary Market is where companies issue new securities to investors to raise capital.

IPO (Initial Public Offering) — The process through which a company offers its shares to the public for the first time.

Other Terms: FPO and OFS — An FPO is a further public issue of shares by an already-listed company, while an Offer for Sale (OFS) allows eligible existing shareholders/promoters to offer shares for sale through the exchange mechanism.

3. Secondary Market

The Secondary Market is where investors and traders buy and sell already-issued securities among themselves through stock exchanges.

4. Stock Exchange

A Stock Exchange is an organised marketplace where securities are bought and sold.

NSE — National Stock Exchange is one of India’s major securities exchanges.

BSE — BSE Limited, historically known as the Bombay Stock Exchange, is one of India’s major securities exchanges.

5. SEBI

SEBI (Securities and Exchange Board of India) is the regulator of India’s securities market.

6. Stock Broker

A Stock Broker is a SEBI-registered intermediary that enables investors and traders to execute transactions on stock exchanges.

7. Demat Account

A Demat Account is an account used to hold shares and other eligible securities electronically.

8. Trading Account

A Trading Account is an account used through a broker to place buy and sell orders in the securities market.

9. Stocks

Stocks or shares represent ownership in a company; when you buy shares, you become a shareholder of the company to the extent of your holding.

10. Index

A Stock Market Index tracks the performance of a selected group of stocks. Nifty 50 and Sensex are India’s two major benchmark indices.

11. GIFT Nifty

GIFT Nifty refers to Nifty-linked derivative contracts traded at NSE IX in GIFT City and is often watched for indications about Indian market sentiment before the domestic market opens.

12. Settlement – T+1

T+1 Settlement means an eligible stock-market transaction is settled on the next business day after the trade date.

13. Pre-Open Market

The Pre-Open Market is a short session before normal trading hours used primarily for price discovery and order matching.

14. Post-Closing Session

The Post-Closing Session is a session after normal market hours in which eligible trades can take place at the exchange-determined closing price.

15. CAS

CAS (Consolidated Account Statement) is a consolidated statement showing an investor’s eligible securities holdings and transactions across demat accounts and mutual fund investments.

16. Cash Market

The Cash Market is the segment where shares are bought and sold directly, either for delivery or intraday trading, unlike derivative contracts such as futures and options.

17. Derivatives

Derivatives are financial contracts whose value is derived from an underlying asset such as a stock or index.

18. Futures

Futures are derivative contracts to buy or sell an underlying asset at a predetermined price according to the terms of the contract for settlement on a future date.

19. Options

Options are derivative contracts that give the buyer a right, but not an obligation, to buy or sell an underlying asset at a specified price, subject to the contract terms.

Lot Size — The fixed number of units contained in one exchange-specified derivatives contract.

20. Expiry

Expiry is the date on which a derivative contract expires or is finally settled.

21. Call Option (CE)

A Call Option (CE) gives its buyer the right to buy the underlying at the specified strike price, subject to the contract terms.

22. Put Option (PE)

A Put Option (PE) gives its buyer the right to sell the underlying at the specified strike price, subject to the contract terms.

23. Strike Price

The Strike Price is the predetermined price associated with exercising or settling an option contract.

24. Option Premium

The Option Premium is the price paid by an option buyer to purchase an option contract.

25. Open Interest (OI)

Open Interest is the total number of outstanding derivative contracts that have not yet been closed or settled.

26. Bid Price

The Bid Price is the highest price a buyer is currently willing to pay for a security.

27. Ask Price

The Ask Price is the lowest price at which a seller is currently willing to sell a security.

28. Trading/Investment Time Horizons

The time horizon refers to the period for which a trader or investor intends to hold a position.

Intraday Trading — Buying and selling a position within the same trading day.

BTST (Buy Today, Sell Tomorrow) — Buying shares today and selling them in the next trading session.

Long-Term Investing — Buying investments with the intention of holding them for an extended period.

29. Investment

Investment means committing money to an asset with the objective of generating income or capital appreciation over time.

30. Trading

Trading means buying and selling securities with the objective of benefiting from price movements.

31. Market Order

A Market Order is an order to buy or sell at the best available market price.

32. Limit Order

A Limit Order is an order to buy or sell only at a specified price or better.

33. Stop-Loss

A Stop-Loss is a predefined exit level intended to limit loss if the market moves against a position.

34. Target Price

A Target Price is a predetermined price level at which a trader or investor may plan to book profit.

35. CNC

CNC (Cash and Carry) is a commonly used broker product type for delivery-based equity transactions.

36. MIS

MIS (Margin Intraday Square-Off) is a broker product type commonly used for intraday transactions.

37. Margin

Margin is the amount required to take and maintain certain trading positions rather than paying the entire contract value.

38. Leverage / Margin Provided by Broker

Leverage means using permitted exposure greater than the trader’s own capital or margin contribution, subject to applicable margin requirements and broker/exchange rules.

39. Volume

Volume is the number of shares or contracts traded during a specified period.

40. Turnover

Turnover generally refers to the total value of securities or contracts bought and sold during a specified period.

41. Upper Circuit

An Upper Circuit is the upper price limit beyond which a security subject to an applicable price band cannot trade during the relevant session, unless the applicable limit is revised.

42. Lower Circuit

A Lower Circuit is the lower price limit beyond which a security subject to an applicable price band cannot trade during the relevant session, unless the applicable limit is revised.

43. 52-Week High

The 52-Week High is the highest price at which a security has traded during the preceding 52 weeks.

44. 52-Week Low

The 52-Week Low is the lowest price at which a security has traded during the preceding 52 weeks.

45. Bull & Bear Market

A Bull Market is a market environment generally characterised by sustained or broad-based rising prices and optimism.

A Bear Market is a market environment generally characterised by sustained or broad-based falling prices and pessimism.

46. Market Capitalisation

Market Capitalisation is the total market value of a company’s outstanding equity shares.

Large Cap, Mid Cap and Small Cap — Under SEBI’s market-cap classification framework, the 1st to 100th companies are Large Cap, 101st to 250th are Mid Cap and 251st onwards are Small Cap, based on full market capitalisation rankings.

47. Dividend

A Dividend is a distribution made by a company to eligible shareholders from profits or reserves, subject to applicable requirements and approvals.

48. Bonus Shares

Bonus Shares are additional shares issued by a company to eligible existing shareholders without additional payment, in a specified ratio.

49. Stock Split

A Stock Split is a corporate action that divides existing shares into a larger number of shares while proportionately reducing their face value.

50. Record Date — The date used by a company to determine shareholders eligible for a corporate action such as a dividend, bonus or rights issue.

There are many more stock market terms to understand, but here we have discussed 50 terms that are regularly or frequently used by traders and investors. Knowing this basic stock market terminology can make it easier to understand how the Indian stock market works and communicate more confidently when investing or trading.

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