In this detailed article, we will list all the important terms and the terminology that you will encounter in your journey of investing in the stock market or mutual funds and even when you study about tax and insurance. We will discuss the Terminology used in Stock markets, insurance, Mutual funds and others.
We will discuss the below terms
Stock or share
Indices(Sensex or Nifty)
Correction in price
Stock Market – #1 Terminology used in Stock markets
The stock market is the place where the share of different companies is traded between different investors. When we say companies, we mean only those companies which are public and whose shares are listed on stock exchanges.
Stock markets is just like any market, and here the things that is exchanged between the individuals is the stocks or shares of different companies.
Stock or share – #2 Terminology used in Stock markets
Stock or share is defined as the part of the ownership of a company of which the stock you own belongs to. For example, you own 200 shares of a company name ABC, you own the ownership which corresponds to this 200 shares. If the total number of shares of the company ABC is 20000 shares, then you own 200/20000th part of the company ABC.
Indices(Sensex or Nifty) – #3 Terminology used in Stock markets
Indices are usually an indicators of the stock market movements or the sectors growth to which the particular indices correspond.
Indices represent how the price of major companies is moving. Indices are designed by the stock exchanges and updated regularly to represent the broader movement accurately.
For example, NIfty50 contains the top 50 companies in India in terms of Market capitalization. this thus accurately explains the growth of top 50 companies of India and in simple the growth of the economy as these companies contribute to a major chunk of nations GDP.
Market Capitalization – #4 Terminology used in Stock markets
Market capitalization is defined as the total value of shares of a company with the present market price of each share or stock. If a company has 10000 shares and the present price of each share is ₹200 then the market capitalization of the company is ₹200*10000 = ₹2000000
Portfolio – #5 Terminology used in Stock markets
The total investments of an individual or an investing company in different assets are together called as Portfolio.
Demat account – #6 Terminology used in Stock markets
DEMAT account is an electronic account for holding the Dematerialized shares of a company. It is an account that is mandatory for holding the shares which are brought.
Stock Broker – #7 Terminology used in Stock markets
Stockbroker an Intermediate between the Investor and Stock Exchanges. It is mandatory that anyone who wanted to invest need to open an account with a stockbroker as the stock exchanges won’t allow direct trading and everyone has to execute the trades through stockbrokers.
Correction in the price – #8 Terminology used in Stock markets
A correction is the price is defined as a reversal in the price movement of the stock. In a Bull movement after moving for some time, if the price falls a bit and again continue to move up, then the small down movement is called a correction in stock price movement.
IPO – #9 Terminology used in Stock markets
IPO stands for Initial Public Offering. It is the process which is used by all the companies which are privately held but wanted to become a public company and via IPO the company issues shares to the public for the first time.
NFO – #10 Terminology used in Mutual funds
NFO stand for New Fund offering. If a new mutual fund is started by the company, then this new fund will be offered to the investor for the first time at a specified price during a specified period.
#11 Terminology used in Stock markets
Dividends are the method by with the company management will distribute the profits of the company during a period to the investors who hold the company shares.
#13 Terminology used in Mutual funds
SIP stands for Systematic Investment Plan. it is the method by which every month you invest a certain fixed amount in an asset and the money continuously debited every month on the specified date.
#14 Terminology used in Mutual funds
NAV stands for Net Asset Value. It is the price of a mutual fund which is determined based on the price increase of the instruments in which the fund is invested and the total value of the fund and the number of investors in the fund.
#15 Terminology used in Mutual funds
Entry load is the percentage amount that need to paid if you wanted to enter into the Mutual fund.
#16 Terminology used in Mutual funds
Exit load is the percentage of the amount which is to be paid by the investor who wanted to exit from the mutual fund before a specified period of time. This is like a fine for the investors for exiting the fund earlier.
#17 Terminology used in mutual funds
The fund manager is the person who will be in charge of the mutual fund. He is the one who takes all the decision regarding the fund he is managing and decides where to invest the funds and when to buy and when to sell. the performance of a fund depends on the fund manager always.
#18 Terminology used in Stock markets
Commodities investment is another instrument for investing in stock markets. It is investing in commodities like Gold, Silver, Agri commodities and much more.
#19 Terminology used in Stock markets
ULIP means an Insurance liked investment plans. This is a hybrid version between investment plans and Insurance providing both the benefits to the investor who have invested in these plans.