Stock market glossary, A to Z

Advance-Decline Ratio

The Advance-Decline Ratio is the number of stocks that rose in a session divided by the number that fell, used to gauge overall market breadth.

An ADR above 1 signals broad participation in an up-move, while a ratio below 1 suggests weakness across the board even if the index is flat. Indian traders watch Nifty 500 breadth to confirm or question headline index moves.

All-Time High (ATH)

An all-time high is the highest price a stock or index has ever reached since it began trading, surpassing every previous peak.

When the Nifty or Sensex prints a fresh all-time high, it means there is no overhead supply of trapped buyers waiting to sell at break-even, which is often read as a sign of strength. ATH levels also become psychological reference points for the market.

Alpha

Alpha measures the excess return a stock or fund delivers above its benchmark index, after adjusting for market risk (beta).

A portfolio with alpha of 3 means it outperformed its benchmark by 3 percentage points on a risk-adjusted basis. In Indian markets, alpha is often calculated against Nifty 50 or a relevant sectoral index.

AMO (After Market Order)

An After Market Order (AMO) is a buy or sell instruction placed after market hours that gets queued for execution when the exchange opens the next trading day.

AMOs are accepted by Indian brokers typically between 3:45 PM and 8:45 AM IST for NSE/BSE equity segments. They are processed at the opening auction price, so actual fill may differ from the quoted price at order placement.

Anchor Investor

An anchor investor is a qualified institutional buyer (QIB) that commits to an IPO allocation before it opens, helping signal confidence to other investors.

SEBI allows up to 60 percent of the QIB portion to be reserved for anchor investors. They receive allotment one day before the IPO opens and are subject to a 30-day lock-in on half their shares and a 90-day lock-in on the rest.

Arbitrage

Arbitrage is the near-simultaneous buying and selling of the same asset in different markets or forms to lock in a risk-free profit from a price gap.

A common Indian example is cash-futures arbitrage: buying a stock in the cash segment and selling its future when the future trades at a premium, capturing the spread by expiry. Arbitrage funds use this strategy and are taxed as equity funds.

ASBA (Application Supported by Blocked Amount)

ASBA is an IPO payment mechanism where your application money is blocked in your bank account, not debited, until allotment is confirmed.

SEBI mandated ASBA for retail investors in 2010. Your funds remain in your savings account and earn interest until the allotment date. Only the amount equivalent to allotted shares is actually debited; the rest is unblocked automatically.

Ask Price

The ask price is the lowest price at which a seller is willing to sell a security at a given moment on the exchange.

On the NSE order book, the ask price appears on the right column of market depth. A buyer placing a market order gets filled at or near the current best ask. The difference between the ask and the bid price is the bid-ask spread.

ASM (Additional Surveillance Measure)

ASM is a SEBI framework that places high-volatility or manipulated stocks under heightened scrutiny, imposing tighter margins and trade restrictions.

Stocks in ASM are typically flagged due to sharp price movements, low liquidity, or corporate governance concerns. The framework has multiple stages: higher stages require 100 percent upfront margin and reduce the attractiveness for speculative trading.

AUM (Assets Under Management)

AUM is the total market value of investments that a mutual fund, portfolio manager, or asset management company manages on behalf of its investors.

In India, AMFI publishes monthly AUM data for each fund house and scheme. A higher AUM can indicate investor trust but may also make it harder for large-cap funds to generate alpha due to liquidity constraints.

Backwardation

Backwardation is a futures market condition where the near-month contract trades at a premium over far-month contracts, indicating immediate demand is stronger than future supply expectations.

In Indian commodity and currency futures, backwardation often reflects supply squeezes or high carrying costs. It is the opposite of contango. Equity index futures in India rarely enter backwardation except during dividend-heavy periods.

Bank Nifty

Bank Nifty is the NSE index tracking the 12 most liquid and large-cap Indian banking stocks, widely used as the benchmark for banking-sector derivatives.

It is one of the most actively traded indices in India's F&O segment. Weekly Bank Nifty options expire every Wednesday. Movements in Bank Nifty often reflect sentiment around RBI policy, credit growth, and quarterly NPA data.

Bank Rate

The bank rate is the rate at which the RBI lends long-term funds to commercial banks without collateral, now aligned with the Marginal Standing Facility rate.

Historically a standalone policy tool, the bank rate is today kept in step with the MSF rate, which is 5.5% as of mid-2026. It is mainly used as a reference for penalty rates on shortfalls in reserve requirements rather than as an active lever.

Basis

Basis is the difference between the futures price and the spot price of an underlying asset at any given point in time.

A positive basis (futures above spot) is normal in equity markets due to the cost of carry. As expiry approaches, basis typically converges to zero. Traders track basis to assess whether the market is in contango or backwardation and to plan rollover strategies.

Bear Market

A bear market is a sustained fall in prices, conventionally marked when a broad index drops 20% or more from a recent peak amid widespread pessimism.

The 20% threshold is market convention, not a legal definition. Bear markets are a normal, recurring part of the cycle, and historically every Indian bear market has eventually been followed by new highs. The danger for investors is capitulating near the bottom.

Benchmark Index

A benchmark index, like the Nifty 50 or Sensex, is a reference basket of stocks used to measure the performance of the broad market or of a fund.

Fund managers are judged on whether they beat their benchmark after fees, which is why outperforming the Nifty 50 is the bar for an actively managed large-cap fund. Index funds and ETFs aim to match a benchmark rather than beat it.

Beta

Beta measures how much a stock tends to move relative to its benchmark index: a beta of 1.2 means the stock typically moves 1.2 percent for every 1 percent market move.

A beta above 1 indicates higher volatility than the market; below 1 means lower volatility. In Indian markets, beta is usually calculated relative to Nifty 50. High-beta stocks like small-caps tend to amplify both rallies and corrections.

Bid Price

The bid price is the highest price a buyer is currently willing to pay for a security on the exchange order book.

On the NSE market depth screen, the best bid appears at the top of the buy side. A seller placing a market order gets filled at or near the best bid. The gap between bid and ask is the bid-ask spread, which narrows in liquid stocks.

Bid-Ask Spread

The bid-ask spread is the difference between the highest buy price and the lowest sell price in the order book, representing the implicit transaction cost of trading.

In highly liquid stocks like Reliance or TCS on the NSE, the spread is often as tight as one paisa. In illiquid small-caps, spreads can be several rupees. A wider spread increases the cost of entry and exit for traders.

Block Deal

A block deal is a single trade of at least 500,000 shares or INR 10 crore in value, executed through the exchange's dedicated block deal window.

Block deals on BSE and NSE take place in a 15-minute window that opens at 8:45 AM IST. Price must be within 1 percent of the previous close or current market price. Large institutions and promoters use block deals to avoid impacting the open market.

Bond Yield

Bond yield is the effective annual return on a bond given its price and coupon, and it moves inversely to the bond's price.

India's benchmark is the 10-year government security (G-sec) yield, which sat near 6.9% in early June 2026 and is treated as the risk-free rate. Rising bond yields tend to pressure equity valuations by raising the discount rate on future profits.

Bonus Issue

A bonus issue is a corporate action where a company issues additional shares to existing shareholders free of cost, in a fixed ratio, funded from its reserves.

A 1:1 bonus doubles the share count while halving the price, leaving market cap unchanged. Indian companies announce bonus issues to improve liquidity and signal confidence in earnings. The record date determines eligibility.

Book Building

Book building is the IPO price-discovery process where the company offers a price band and investors bid within it, and the final issue price is set from the demand collected.

Most Indian IPOs use the book-building route, where bids across the price band build a demand book. The cut-off price is then fixed based on subscription. The alternative, a fixed-price issue, names a single price upfront and is now rare for large issues.

Book Value

Book value is the net asset value of a company, calculated as total assets minus total liabilities, often expressed on a per-share basis.

Per-share book value equals shareholders' equity divided by total shares outstanding. If a stock trades below book value, it may be undervalued; above book value is typical for high-growth businesses. The Price-to-Book ratio compares market price to book value.

Broker

A broker is a SEBI-registered intermediary that executes buy and sell orders on behalf of investors on exchanges like NSE and BSE.

Brokers in India can be full-service (offering research and advisory) or discount (flat-fee, platform-only). They hold a trading member license from the exchange and are regulated by SEBI. Zerodha, Groww, and ICICI Direct are prominent Indian examples.

Bulk Deal

A bulk deal is any transaction where the traded quantity in a single order exceeds 0.5 percent of the total listed shares of a company on a given day.

NSE and BSE disclose all bulk deals at end of day. Unlike block deals, bulk deals happen through the regular market window at prevailing prices. Promoters, FIIs, and large domestic funds are frequent participants. Tracking bulk deals helps identify institutional interest.

Bull Market

A bull market is a sustained rise in prices driven by optimism, strong earnings and rising participation, the opposite of a bear market.

There is no fixed percentage that defines a bull market the way 20% defines a bear market, but the term describes a prolonged uptrend. The danger for investors in a long bull run is complacency: stretched valuations and excess risk-taking at the most expensive point.

Buyback

A share buyback is when a company repurchases its own shares from the market or via a tender offer, reducing the total outstanding share count.

Buybacks are a tax-efficient alternative to dividends for returning capital in India. SEBI's buyback regulations cap the repurchase at 25 percent of paid-up capital and free reserves. After a buyback, EPS typically rises because fewer shares remain.

CAGR (Compound Annual Growth Rate)

CAGR is the annualised rate at which an investment grows from its beginning value to its ending value over a specified period, assuming reinvestment.

CAGR smooths out year-to-year volatility to show a single, steady growth rate. For mutual fund comparisons in India, CAGR over 3, 5, and 10 years is the standard metric. It differs from XIRR when cash flows occur at irregular intervals.

Call Option

A call option gives the buyer the right, but not the obligation, to purchase an underlying asset at a fixed strike price on or before the expiry date.

In India, index and stock options are European-style and can only be exercised on expiry. Buying a call is a bullish strategy: the maximum loss is the premium paid, while the profit potential is theoretically unlimited. NSE lists weekly and monthly Nifty call options.

Cash Reserve Ratio (CRR)

CRR is the share of its deposits a bank must keep with the RBI as cash, earning no interest, which is 3.00% as of mid-2026.

CRR is a quantity tool of monetary policy: raising it locks up more of every deposit and reduces lending capacity, while cutting it releases cash into the system. Because the parked cash earns nothing, a high CRR is a drag on bank profitability.

Circuit Breaker

A circuit breaker is an exchange-level mechanism that halts all trading when the benchmark index moves beyond a preset percentage threshold in a single session.

SEBI mandates index-wide circuit breakers on NSE and BSE at 10, 15, and 20 percent. A 10 percent move triggers a 45-minute halt if it happens before 1 PM, a 15-minute halt between 1 PM and 2:30 PM, and no resumption for the rest of the day after 2:30 PM. Stock-specific limits are called circuit filters.

Consumer Price Index (CPI)

The CPI tracks the price of a fixed basket of goods and services that a typical household buys, and is the main gauge of retail inflation in India.

The RBI targets CPI inflation at 4% within a 2% to 6% band. The CPI basket is weighted heavily toward food and fuel, so monsoon and oil swings drive it. Core CPI strips out food and fuel to show the underlying trend the RBI watches most closely.

Contango

Contango is a futures market condition where far-month contracts trade at a higher price than near-month contracts, typically because of carrying costs.

Equity index futures in India are almost always in contango because the cost of carry (interest minus expected dividends) is positive. The premium erodes as expiry approaches. Understanding contango helps traders assess fair value while rolling positions forward.

Current Account Deficit (CAD)

The current account deficit is the gap by which a country's imports of goods, services and transfers exceed its exports, measured as a share of GDP.

A wide CAD means India is spending more abroad than it earns, which pressures the rupee and must be financed by foreign capital inflows. Because India imports large volumes of crude oil and gold, the CAD widens when oil prices rise, linking it to inflation and the currency.

Current Ratio

The current ratio is a liquidity metric calculated by dividing a company's current assets by its current liabilities, measuring its ability to pay short-term obligations.

A ratio above 1 indicates the company can cover short-term liabilities with short-term assets. Manufacturing and retail companies in India typically target a current ratio of 1.5 to 2. However, very high ratios can indicate idle cash or slow-moving inventory.

Debt-to-Equity Ratio

The debt-to-equity ratio compares a company's total borrowings to its shareholders' equity, indicating how much debt is used to finance assets relative to equity.

A D/E ratio of 1 means the company has equal debt and equity. Capital-intensive sectors like infrastructure and power generation in India often carry higher D/E ratios than technology or FMCG companies. Lenders use this ratio to assess credit risk.

Delisting

Delisting is the permanent removal of a company's shares from a stock exchange, either voluntarily by the promoter or mandatorily by SEBI or the exchange.

In a voluntary delisting, the acquirer must conduct a reverse book-building process where public shareholders tender shares and discover an exit price. Mandatory delisting happens when a company fails to meet listing obligations. After delisting, retail shareholders typically lose liquidity for their holdings.

Delta

Delta is the rate of change in an option's price for a one-rupee (or one-point) change in the underlying asset's price.

Call options have delta between 0 and 1; put options between -1 and 0. An at-the-money option has a delta of roughly 0.5, meaning it moves about 50 paise for every rupee the underlying moves. Delta also approximates the probability that an option will expire in-the-money.

Demat Account

A demat account holds shares and securities in electronic form, eliminating physical certificates, and is maintained by a depository participant in India.

All Indian investors must hold securities in demat form with either NSDL or CDSL, accessed via a depository participant (DP) such as a bank or broker. Demat accounts store equities, mutual fund units (in statement-of-account form), bonds, and sovereign gold bonds.

Depository (NSDL/CDSL)

NSDL and CDSL are India's two central depositories that hold securities in electronic form and settle trades executed on NSE and BSE respectively.

NSDL (National Securities Depository Limited) was established in 1996, primarily serving NSE. CDSL (Central Depository Services Limited) was set up in 1999 and is more closely associated with BSE. Investors can hold accounts with either depository through any registered DP.

DII (Domestic Institutional Investor)

DIIs are Indian institutional investors, including mutual funds, insurance companies, and pension funds, that invest in domestic capital markets.

In India, LIC, EPFO, and large mutual fund houses are the major DIIs. DII buying often counters FII selling and provides a cushion during foreign outflow-driven corrections. SEBI requires daily disclosure of DII buy-sell activity.

Direct Plan

A direct plan of a mutual fund is bought straight from the fund house with no distributor commission, so it carries a lower expense ratio than the regular plan.

SEBI introduced direct plans in 2013. Because they cut out the distributor's trail commission, their expense ratio is lower, which compounds into a meaningfully higher return over years for the same scheme. The trade-off is that you forgo advice and do the research yourself.

Dividend

A dividend is a cash or stock payment that a company distributes to shareholders from its profits, usually declared as a fixed amount per share.

In India, dividends are taxable in the hands of the investor at their applicable income-tax slab rate. Companies declare interim and final dividends; the record date determines which shareholders are eligible. A high dividend yield can signal value, but may also indicate a lack of reinvestment opportunity.

Dividend Payout Ratio

The dividend payout ratio is the share of a company's net profit paid out to shareholders as dividends, with the rest retained for reinvestment.

A payout ratio of 30% means the company distributes 30 paise of every rupee of profit and reinvests the remaining 70. Mature, cash-rich companies tend to have high payout ratios, while fast-growing firms retain more to fund expansion. It complements dividend yield.

Dividend Yield

Dividend yield is the annual dividend per share expressed as a percentage of the current market price, showing the income return from owning a stock.

A stock paying INR 20 annual dividend at a price of INR 400 has a 5 percent dividend yield. PSU stocks in India often carry higher yields than private-sector growth companies. Dividend yield is used alongside P/E to assess value.

DRHP (Draft Red Herring Prospectus)

The DRHP is the preliminary IPO document filed with SEBI containing company details, financials, risk factors, and intended use of proceeds, pending regulatory approval.

SEBI reviews the DRHP and can raise observations; the company then files the final Red Herring Prospectus (RHP) with confirmed price band and dates. The DRHP is publicly available on SEBI's website and is essential reading for informed IPO participation.

Earnings Yield

Earnings yield is the inverse of the P/E ratio, the annual earnings a company produces as a percentage of its share price, so a P/E of 20 is a 5% earnings yield.

Earnings yield is the like-for-like number to compare against a bond yield, because both measure annual return per rupee invested. When the equity earnings yield is well above the 10-year G-sec yield, stocks look relatively cheap against the risk-free alternative.

EBITDA

EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortisation, a measure of a company's core operating profitability before capital structure and accounting choices.

Indian analysts use EBITDA to compare companies across sectors and capital structures. EBITDA margin, expressed as EBITDA divided by revenue, shows operating efficiency. It is not a cash-flow measure and does not account for debt servicing.

ELSS (Equity Linked Savings Scheme)

ELSS is a tax-saving mutual fund that invests primarily in equities and offers a deduction of up to INR 1.5 lakh per year under Section 80C, with a mandatory 3-year lock-in.

ELSS has the shortest lock-in period among all 80C instruments, including PPF and NSC. Units bought via SIP in ELSS each have their own 3-year lock-in starting from the purchase date. Returns are subject to long-term capital gains tax above INR 1.25 lakh.

Enterprise Value (EV)

Enterprise value is a company's market capitalisation plus its net debt, representing the total price to acquire the whole business including its borrowings.

EV is often a fairer measure than market cap alone because it accounts for debt and cash. The EV-to-EBITDA multiple is widely used to compare companies with different debt loads, since it is capital-structure neutral, unlike the P/E ratio.

EPS (Earnings Per Share)

EPS is a company's net profit divided by its total outstanding shares, representing the earnings attributable to each share of the company.

Diluted EPS accounts for potentially dilutive instruments like ESOPs and convertible bonds. Indian quarterly results report basic and diluted EPS. Rising EPS over successive quarters is a primary indicator of business health. P/E is calculated by dividing price by EPS.

ESOP (Employee Stock Option Plan)

An ESOP grants employees the right to buy company shares at a predetermined price (exercise price) after a vesting period, as a form of compensation.

ESOPs in Indian listed companies are governed by SEBI's ESOP guidelines. Employees pay tax at exercise (as perquisite income) and again at sale (as capital gains). Large ESOP grants can dilute existing shareholders over time, which is reflected in diluted EPS.

ETF (Exchange Traded Fund)

An ETF is a fund that tracks an index or basket of assets and is listed on a stock exchange, allowing it to be bought and sold at live market prices like a stock.

In India, Nifty 50 and Sensex ETFs are the most popular, offered by fund houses like NIPPON, SBI, and HDFC. ETFs typically have lower expense ratios than actively managed funds. Unlike mutual funds, ETF units trade at market price, which can deviate slightly from the NAV.

Ex-Date

The ex-date is the cutoff date from which a stock trades without the right to receive an upcoming dividend, bonus, or rights issue.

Under India's T+1 settlement cycle, you must own the shares by end of the day before the ex-date to be eligible for the corporate action. On the ex-date itself, the stock price is typically adjusted downward by the dividend or bonus ratio. The record date usually falls one day after the ex-date.

Exit Load

An exit load is a fee charged by a mutual fund when an investor redeems units before a specified holding period, expressed as a percentage of the redemption value.

Most equity mutual funds in India charge 1 percent exit load if units are redeemed within 1 year. Liquid funds often have a tiered exit load for the first 7 days. ELSS has a lock-in of 3 years, so no exit load is applicable. Exit load is distinct from the expense ratio.

Expense Ratio

The expense ratio is the annual fee that a mutual fund deducts from the scheme's assets to cover management, administration, and distribution costs, expressed as a percentage of AUM.

SEBI caps expense ratios for equity mutual funds on a slab basis. Direct plans have lower expense ratios than regular plans because they exclude distributor commissions. Even a 0.5 percent difference in expense ratio compounds significantly over a 10- or 20-year horizon.

Expiry

Expiry is the last trading day for a futures or options contract, after which all open positions are settled or expire worthless.

In India, monthly Nifty and Bank Nifty contracts expire on the last Thursday of the month. Weekly options expire on Thursday of each week for major indices. Stock futures and options expire monthly. After expiry, all unexercised out-of-the-money options become worthless.

Exposure Margin

Exposure margin is an additional margin collected by exchanges over and above SPAN margin to cover residual risk in derivatives positions.

In India, total margin for derivatives is SPAN margin plus exposure margin. Exposure margin varies by segment and is typically 2 to 3 percent of contract value for index futures and higher for stock futures. Failure to maintain required margins triggers margin calls and position squaring.

52-Week High

A 52-week high is the highest price at which a stock has traded over the past year, a widely watched reference for momentum and strength.

Stocks making new 52-week highs are often screened by momentum investors, while those near 52-week lows attract value hunters and bargain seekers. The level is a psychological marker that can act as support or resistance once breached.

52-Week Low

A 52-week low is the lowest price at which a stock has traded over the past year, watched by value investors and as a sign of weakness.

A stock repeatedly hitting fresh 52-week lows signals persistent weakness, which can be a falling-knife trap or a value opportunity depending on the cause. Screening for 52-week lows is a common starting point for contrarian and deep-value strategies.

Face Value

Face value (also called par value) is the nominal value of a share as stated in the company's memorandum of association, typically INR 1 or INR 10.

Face value is the base for calculating dividends per share and stock split ratios. Most Indian companies have a face value of INR 1 or INR 2 after splitting. It does not reflect market price or book value. Bonus shares are issued at face value charged to reserves.

FII (Foreign Institutional Investor)

FIIs (now called FPIs under current SEBI terminology) are foreign portfolio investors registered with SEBI who invest in Indian equities, bonds, and derivatives.

Foreign portfolio inflows and outflows have a significant impact on Indian markets, especially mid- and small-caps. Net FII/FPI buying or selling data is published daily by NSE, BSE, and SEBI. Sustained FII selling often leads to rupee depreciation and index corrections.

Fiscal Deficit

The fiscal deficit is the gap between the government's total spending and its total revenue in a year, usually expressed as a percentage of GDP.

A higher fiscal deficit means the government must borrow more, which can push up bond yields and crowd out private borrowing. Markets watch the Union Budget's fiscal-deficit target closely because government borrowing competes with companies for capital.

Foreign Exchange Reserves

Forex reserves are the foreign currencies, gold and other assets the RBI holds, used to manage the rupee and meet external payment needs.

India's reserves are among the largest in the world and act as a war chest. The RBI sells dollars from reserves to slow a sharp rupee fall and buys to curb excessive strength. A healthy reserve cover reassures foreign investors about the country's external stability.

FPO (Follow-on Public Offer)

An FPO is a public offering of shares by an already-listed company to raise additional capital from the general public, either as fresh shares or as an offer for sale.

Unlike an IPO, an FPO is available for a company with an existing market price, giving investors a reference point. FPOs in India are governed by SEBI's ICDR Regulations. Dilutive FPOs increase share count and can pressure EPS unless the capital is deployed productively.

Free Cash Flow (FCF)

Free cash flow is the cash a company generates from operations after subtracting capital expenditure, the real cash left for dividends, debt repayment and growth.

FCF is harder to manipulate than reported profit, which makes it a favourite of quality-focused investors. A company that consistently produces strong free cash flow can fund buybacks, dividends and expansion without raising debt or diluting shareholders.

Free Float

Free float is the proportion of a listed company's shares that are available for public trading, excluding shares held by promoters, governments, and strategic investors.

Nifty 50 and other NSE indices weight constituents by free-float market cap, not total market cap. A low free-float stock can be more volatile because a smaller number of shares chase the same demand. SEBI requires a minimum 25 percent public shareholding for most listed companies.

Freeze Quantity

Freeze quantity is the maximum number of shares or units that can be placed in a single order for a given stock, above which exchange approval is required.

NSE and BSE set freeze quantities for each scrip based on liquidity and market lot. Orders exceeding the freeze quantity must be split across multiple orders or submitted via the block deal window. Freeze quantities are particularly relevant for low-liquidity stocks.

Gamma

Gamma measures the rate of change in an option's delta for a one-unit move in the underlying asset, indicating how quickly delta accelerates.

High gamma means a small move in the underlying produces a large change in delta. At-the-money options near expiry have the highest gamma, making them sensitive to last-minute price swings. Gamma risk is a key concern for options sellers (writers) in Indian markets.

Gap Up and Gap Down

A gap up is when a stock opens significantly higher than its previous close, and a gap down when it opens significantly lower, leaving a gap on the chart.

Gaps usually form on overnight news, results or global cues that hit when the market is closed. Traders watch whether a gap fills, meaning price returns to the prior close, or holds, which can signal the strength of the move that created it.

GDP (Gross Domestic Product)

GDP is the total value of all final goods and services an economy produces in a period, the broadest single measure of economic size and growth.

Real GDP strips out inflation to show genuine growth, while nominal GDP includes price rises. Over the long run corporate earnings track the economy, but the stock market is forward-looking and often moves ahead of and out of step with the lagging GDP data.

GMP (Grey Market Premium)

GMP is the premium at which IPO shares are bought and sold in an unofficial grey market before the stock is officially listed on the exchange.

GMP is not regulated by SEBI and is purely speculative; it is used as an informal gauge of listing demand. A high GMP suggests strong subscription and expected listing gains, but it is not a guaranteed indicator. Relying solely on GMP for IPO investment decisions is risky.

Government Security (G-Sec)

A G-sec is a debt instrument issued by the central or state government, considered the safest rupee investment because the government is assumed not to default.

The 10-year G-sec yield is India's benchmark risk-free rate, against which corporate bonds, loans and even equities are priced. G-secs are held by banks to meet their SLR requirement and are increasingly accessible to retail investors via the RBI Retail Direct platform.

Greenshoe Option

A greenshoe option lets an IPO's underwriters issue extra shares, typically up to 15% of the offer, to stabilise the price if demand is strong after listing.

Formally an over-allotment option, the greenshoe is a price-stabilisation tool. If the stock trades above the issue price, the extra shares meet demand, and if it falls, the stabilising agent buys back shares to support it. It cushions early post-listing volatility.

Gross Margin

Gross margin is revenue minus the direct cost of goods sold, divided by revenue, showing how much a company keeps after the basic cost of making its product.

Gross margin sits above operating and net margin in the profit cascade. A high and stable gross margin often signals pricing power or a strong brand, while a thin or shrinking gross margin points to a commodity business with little control over its selling price.

Gross Value Added (GVA)

GVA measures the value of goods and services produced in an economy from the supply side, before adjusting for taxes and subsidies to arrive at GDP.

GVA is GDP viewed from the production angle. Analysts watch sector-wise GVA, for agriculture, industry and services, to see which parts of the economy are driving growth. GDP equals GVA plus product taxes minus subsidies.

GSM (Graded Surveillance Measure)

GSM is a SEBI and exchange surveillance framework that flags fundamentally weak or speculative stocks, restricting their trading to once a week with 100 percent upfront margin.

Stocks in higher GSM stages (Stage IV, V, VI) can only be traded once a week, effectively eliminating intraday activity and leverage. SEBI uses GSM to deter speculative activity in penny stocks. Being placed in GSM often leads to sharp price corrections as traders exit.

GTT (Good Till Triggered)

A GTT order is a conditional order that stays active on the broker's system and is triggered and placed on the exchange only when the stock price hits a preset level.

GTT orders in India are offered by brokers like Zerodha and are valid for up to one year. They are useful for setting target or stop-loss levels without constant monitoring. A GTT is not an exchange order until the trigger price is hit; the actual fill is then at market or limit price.

Haircut

A haircut is the percentage by which the value of a security pledged as collateral is reduced, to protect the lender against a fall in its price.

When you pledge shares for margin, the broker applies a haircut, so 100 rupees of stock might give only 80 rupees of usable margin. Higher-volatility or lower-quality securities attract larger haircuts. The term also applies to losses creditors accept in a debt restructuring.

Hedging

Hedging is taking an offsetting position, usually in derivatives, to reduce the risk of an adverse price move in an asset you already hold.

An investor holding a stock portfolio might buy Nifty put options or short futures to protect against a market fall, sacrificing some upside for downside insurance. Hedging reduces risk and cost together; it is protection, not a profit-seeking bet.

HNI (High Net-worth Individual) in IPO

In an IPO context, HNIs (also called Non-Institutional Investors) are applicants bidding for shares worth more than INR 2 lakh, qualifying for a reserved allocation quota.

SEBI mandates a minimum 15 percent HNI reservation in the main-board IPO allocation. HNI applications above INR 10 lakh (sNII) and below INR 10 lakh (bNII) are further subdivided since 2022. HNIs often use leverage (IPO financing) to maximise allotment chances when oversubscription is high.

Impact Cost

Impact cost is the percentage difference between the actual executed price and the ideal price when a large order moves the market, used by NSE as a liquidity metric for index inclusion.

A lower impact cost means higher liquidity. NSE uses a specific impact cost threshold (typically below 0.5 percent on a notional INR 10 crore order) as an eligibility criterion for stocks to enter the Nifty 50 index. High impact cost translates to higher execution slippage for institutional orders.

Index Fund

An index fund passively replicates the portfolio of a benchmark index such as Nifty 50 or Sensex, aiming to match the index return rather than beat it.

Index funds in India typically have lower expense ratios than active funds. Tracking error, the deviation between the fund's return and the index return, is the primary quality metric. SEBI requires index funds to invest at least 95 percent in index constituents.

India VIX

India VIX is the NSE's volatility index, measuring market expectations of near-term (30-day) volatility derived from Nifty 50 options prices.

A high India VIX (above 20) indicates greater uncertainty and fear; a low VIX (below 13) signals complacency. India VIX typically spikes during elections, global crises, and RBI policy events. Options sellers benefit from high VIX through elevated premiums, but face higher risk.

Inflation

Inflation is the rate at which the general price level rises over time, eroding the purchasing power of money, measured in India mainly by the CPI.

Moderate, stable inflation near the RBI's 4% target is healthy, but high inflation erodes real returns and squeezes corporate margins, and it triggers rate hikes that pressure equity valuations. Investors hold equities partly because they have historically outpaced inflation.

Insider Trading

Insider trading is the buying or selling of a listed company's securities based on material, non-public information, which is illegal under SEBI regulations.

SEBI's Prohibition of Insider Trading Regulations 2015 define insiders as directors, employees, and any person with access to unpublished price-sensitive information (UPSI). Companies must maintain structured disclosure windows and trading restriction periods around financial results. Violations can attract fines, disgorgement, and imprisonment.

Intrinsic Value (Options)

Intrinsic value of an option is the amount by which it is in-the-money, calculated as the difference between the underlying's market price and the option's strike price.

A Nifty 22,000 call option has intrinsic value only if Nifty is above 22,000: the intrinsic value equals spot minus strike. Out-of-the-money options have zero intrinsic value. Total option premium equals intrinsic value plus time value.

IPO (Initial Public Offering)

An IPO is the process through which a private company offers its shares to the public for the first time and gets listed on a stock exchange.

In India, main-board IPOs are governed by SEBI's ICDR Regulations. The company files a DRHP, sets a price band, opens the subscription window for 3 days, and then lists on NSE or BSE. Retail investors apply via ASBA or UPI mandates and must wait for allotment.

Limit Order

A limit order is an instruction to buy or sell a security at a specified price or better, ensuring you control the price but not guaranteeing execution.

Limit orders sit in the exchange's order book until matched by a counterparty or cancelled. A buy limit below the current price waits for the price to fall; a sell limit above current price waits for the price to rise. Limit orders are preferable in thin or volatile markets to avoid adverse fills.

Liquidity

Liquidity is how easily an asset can be bought or sold without moving its price, with high-liquidity stocks trading in large volumes at tight spreads.

A liquid stock like a Nifty 50 constituent can absorb large orders with minimal price impact, while an illiquid small cap can swing sharply on a modest trade. Liquidity also describes the cash available in the banking system, which the RBI manages through its policy tools.

Listing Gain

Listing gain is the percentage appreciation in an IPO stock's price on its first day of trading on the exchange, relative to the issue price.

A high GMP before listing often predicts strong listing gains but is not guaranteed. In India, stocks that list at a premium frequently see selling pressure from allottees booking profits on listing day. Tax treatment of listing gains follows short-term capital gains rules since the holding period is under 1 year.

Lock-in Period

A lock-in period is a span during which an investor cannot sell or redeem an investment, applying to ELSS funds, anchor IPO shares and promoter holdings.

An ELSS tax-saving fund has a three-year lock-in, the shortest among Section 80C options. IPO anchor investors face a lock-in on their allotment, and promoters have minimum lock-ins on their post-IPO holdings under SEBI rules, which protects other shareholders.

LODR (Listing Obligations and Disclosure Requirements)

SEBI's LODR Regulations set the continuous disclosure and governance obligations that listed Indian companies must fulfil to their shareholders and the exchanges.

LODR mandates quarterly financial results within 45 days, related-party transaction disclosures, board composition requirements, and prompt reporting of material events. Non-compliance attracts fines from NSE and BSE and can trigger regulatory action by SEBI.

Long Buildup

A long buildup in derivatives is when price rises along with open interest, signalling that fresh buyers are entering and backing the up-move with new money.

It is generally read as the strongest bullish combination because new long positions, not just short covering, are driving the move. The opposite, a short buildup, is price falling on rising open interest, which is bearish as fresh sellers lean in.

Long Unwinding

Long unwinding is when price falls along with falling open interest, meaning existing buyers are closing their positions and booking out of the trade.

It is the gentler of the bearish signals: holders are exiting rather than fresh sellers piling in, so the down-move often lacks the conviction of a short buildup. Reading whether weakness is long unwinding or a short buildup helps gauge how sustained a fall may be.

Lot Size

Lot size in the F&O segment is the minimum number of units in one futures or options contract as fixed by the exchange for a given underlying.

Nifty 50 has a lot size of 75 units per contract. SEBI periodically revises lot sizes so that the contract value stays within a prescribed range (currently around INR 5 to 10 lakh). In IPOs, lot size refers to the minimum number of shares a retail investor must apply for.

Lower Circuit

A lower circuit is the maximum percentage fall allowed in a stock's price in a single trading session before trading is halted for a cooling-off period.

In India, individual stock circuit limits are set at 2, 5, 10, or 20 percent by the exchanges depending on the scrip's liquidity and volatility profile. Once the lower circuit is hit, only buy orders can be placed (no sellers willing to sell below the circuit floor), and trading resumes at a new band.

LTP (Last Traded Price)

LTP is the price at which the most recent trade in a security was executed on the exchange, displayed in real time on trading platforms.

LTP differs from the bid and ask prices; it is the actual last deal price. In illiquid stocks, LTP may lag significantly behind current demand. During the pre-open session on NSE, the LTP from the previous day's close is used as the reference price for circuit limits.

Margin

Margin is the collateral (cash or approved securities) that a trader must deposit with a broker to take leveraged positions in futures or options.

SEBI requires collection of SPAN plus exposure margin for all F&O positions. Insufficient margin triggers a margin call; continued shortfall leads to automatic position square-off. Margins are recalculated daily based on volatility, so they can increase overnight.

Margin Call

A margin call is a broker's demand that you add funds when your account falls below the required margin, failing which positions may be squared off.

Margin calls hit leveraged positions when the market moves against them and the collateral value drops. If you do not top up, the broker can liquidate your holdings to recover the shortfall, often at the worst possible moment, which is why leverage cuts both ways.

Marginal Standing Facility (MSF)

The MSF is an emergency RBI window where banks can borrow overnight funds above their normal limit at a penal rate, which is 5.5% as of mid-2026.

The MSF sits just above the repo rate and forms the upper bound of the policy rate corridor. Banks tap it when they are short of cash beyond what the repo allows. Its rate is currently kept in line with the bank rate, both at 5.5% as of mid-2026.

Market Breadth

Market breadth measures the number of stocks advancing versus declining in a given session, indicating whether a move in the index is broad-based or driven by only a few large-caps.

Positive breadth during a Nifty rally (most stocks rising) confirms the move. Negative breadth during a rally (few stocks pulling the index higher) is a divergence warning. Tools like Advance-Decline Ratio, McClellan Oscillator, and 52-week high/low counts measure breadth.

Market Cap

Market cap is the total market value of a listed company's outstanding shares, calculated by multiplying the current share price by the number of shares outstanding.

SEBI defines large-caps as the top 100 companies by market cap, mid-caps as ranks 101 to 250, and small-caps as rank 251 and beyond. Market cap is reviewed semi-annually. It is used for index weighting, portfolio classification, and comparisons via metrics like Price-to-Sales.

Market Cap to GDP

Market-cap-to-GDP, the Buffett indicator, divides the total value of all listed companies by the country's GDP to gauge whether the whole market is cheap or expensive.

Loosely, a reading below about 75% for India has signalled a cheap market and above about 100% to 110% a stretched one, though these bands are rough conventions, not precise triggers. It is a slow-moving valuation thermometer, useful for context, not for timing.

Market Correction

A market correction is a fall of 10% to 20% from a recent peak in a broad index, sharper than a routine dip but shallower than a bear market.

Corrections are common, even within healthy bull markets, and are often the price of admission for the longer climb. The convention is that under 10% is a dip, 10% to 20% is a correction, and 20% or more is a bear market. The labels are confirmed only in hindsight.

Market Depth

Market depth shows the full order book of pending buy and sell orders at different price levels for a security, revealing supply and demand at each price point.

NSE's Level 2 market depth displays the top 20 bid and ask price levels with their quantities. Traders use market depth to gauge support and resistance, anticipate large fills, and assess liquidity before executing large orders. Thin depth signals higher impact cost.

Market Order

A market order is an instruction to buy or sell a security immediately at the best available price in the current order book.

Market orders guarantee execution but not price. In liquid stocks, the fill is close to the last traded price. In illiquid stocks, a large market order can significantly move the price against the buyer or seller. Indian exchanges do not accept market orders during pre-open sessions.

Max Pain

Max pain is the strike price at which the total value of expiring options (both calls and puts) is minimised, theoretically causing the maximum loss for option buyers.

The theory suggests that the underlying tends to gravitate toward the max pain strike as expiry approaches, because options sellers (who hold large positions) may hedge in ways that push the price there. Max pain is calculated weekly for Bank Nifty and Nifty. It is a useful reference level, not a guarantee.

MTM (Mark-to-Market)

MTM is the daily settlement of gains and losses on futures positions based on the closing price, with profits credited or losses debited from the margin account.

All futures positions in India are settled daily at the exchange's closing reference price. A long futures position that closes below your entry price will see the difference debited as MTM loss. This daily cash flow makes futures different from options, where losses are capped at premium paid.

Mutual Fund NAV

NAV (Net Asset Value) is the per-unit value of a mutual fund scheme, calculated by dividing the scheme's total net assets by the number of outstanding units.

NAV is calculated at end of each business day by AMFI-registered AMCs. Buying at a higher NAV is not worse than buying at a lower NAV, because the value of the underlying portfolio is the same. Comparing NAV across funds or using it to judge cheapness is a common misconception.

Net Profit Margin

Net profit margin is a company's net profit as a percentage of its revenue, showing how much of every rupee of sales it keeps as bottom-line profit.

It is the final margin in the profit cascade, after all costs, interest and tax. A 12% net margin means the company keeps 12 paise of profit per rupee of revenue. Margins vary hugely by sector, so net margin is most useful when compared within an industry, not across.

NFO (New Fund Offer)

An NFO is the period during which a new mutual fund scheme is open for subscription for the first time, typically at a face value of INR 10 per unit.

NFOs are similar to IPOs for mutual funds but should be evaluated differently: an NFO has no track record and the INR 10 NAV is not inherently cheap. SEBI mandates a minimum subscription window for NFOs. Investors should assess the fund's objective and mandate rather than the face-value illusion.

Nifty 50

Nifty 50 is NSE's benchmark index comprising the 50 largest and most liquid Indian companies by free-float market cap, representing key sectors of the Indian economy.

The index is computed in real time during market hours and is rebalanced semi-annually. Nifty 50 futures and options are among the world's most actively traded derivatives contracts. Index inclusion requires meeting SEBI's criteria for market cap, liquidity, and trading frequency.

Nifty Next 50

Nifty Next 50 tracks the 50 largest companies by free-float market cap after the Nifty 50, making it a large-cap plus mid-cap blend and a feeder for future Nifty 50 inclusions.

Stocks that qualify for Nifty 50 are typically first found in Nifty Next 50. The index has historically delivered higher returns than Nifty 50 over long periods but with greater volatility. Several ETFs and index funds in India track Nifty Next 50.

OFS (Offer for Sale)

An OFS is a mechanism by which promoters or large shareholders of a listed company sell their existing shares to the public through the exchange, without new share issuance.

OFS is simpler and faster than an FPO. It is completed in a single trading day on NSE or BSE. Promoters who want to reduce their stake and comply with minimum public shareholding norms use OFS. Retail investors get a 5 percent discount in some OFS structures.

Open Interest

Open interest is the total number of outstanding (not yet settled) futures or options contracts for a specific underlying at a given point in time.

Rising open interest during a price rally confirms the trend, as new money is entering. Falling open interest during a price rise suggests short-covering, not fresh buying. NSE publishes open interest data for every F&O contract throughout the trading day.

Open Market Operations (OMO)

OMOs are the RBI's buying and selling of government securities in the open market to inject or drain rupee liquidity from the banking system.

When the RBI buys G-secs, it pumps cash into banks, easing liquidity, and when it sells, it absorbs cash, tightening it. OMOs are a flexible day-to-day liquidity tool that works alongside the repo rate and reserve ratios to manage the quantity of money.

Operating Margin

Operating margin is a company's operating profit divided by its revenue, expressed as a percentage, showing how efficiently it generates profit from its core business.

It differs from EBITDA margin in that it includes depreciation and amortisation. Indian IT companies typically report operating margins of 15 to 25 percent; FMCG companies can exceed 20 percent. Margin expansion over quarters is a positive signal for stock performance.

Oversubscription

Oversubscription is when the total applications received in an IPO exceed the number of shares available, expressed as a multiple such as 50 times oversubscribed.

High oversubscription in the retail or QIB category signals strong demand and usually correlates with better listing performance, though it is not a guarantee. In heavily oversubscribed IPOs, retail allotment is done by lottery (one lot per applicant) to ensure wide distribution.

P/B Ratio (Price to Book)

The Price-to-Book ratio compares a stock's market price to its book value per share, helping assess whether the market values the company above or below its net assets.

A P/B below 1 may indicate undervaluation or deep financial stress. Banking stocks in India are commonly evaluated on P/B because their assets are mostly financial instruments with known book values. High-growth tech and consumer brands often trade at P/B multiples of 10 or more.

P/E Ratio (Price to Earnings)

The Price-to-Earnings ratio divides a stock's market price by its earnings per share, showing how many rupees investors are paying for each rupee of earnings.

A high P/E can signal growth expectations or overvaluation; a low P/E may indicate value or declining business. The Nifty 50 P/E ratio, published daily by NSE, is a common barometer of overall market valuation. Trailing P/E uses past earnings; forward P/E uses analyst estimates.

PCR (Put-Call Ratio)

PCR is the ratio of total put open interest (or volume) to total call open interest (or volume) for an underlying, used to gauge market sentiment.

A PCR above 1 means more puts than calls are outstanding, suggesting bearish hedging or contrarian bullish signals. A PCR below 0.7 is typically read as complacency or excess bullishness. Indian traders watch Nifty and Bank Nifty PCR closely around weekly option expiries.

PEG Ratio

The PEG ratio is the P/E ratio divided by the company's earnings growth rate, adjusting for growth to identify whether a stock's P/E is justified by its growth prospects.

A PEG of 1 is generally considered fair value. PEG below 1 suggests potential undervaluation relative to growth. PEG is particularly useful for comparing growth stocks in India's consumer, IT, and healthcare sectors where high P/E ratios are common.

Physical Settlement

Physical settlement in Indian stock F&O means that upon expiry, outstanding positions are settled by actual delivery of shares rather than cash difference.

SEBI mandated physical settlement for all stock derivatives from October 2019. If a stock futures or in-the-money stock option position is held to expiry, shares are delivered to or taken from the demat account. This has made holding stock F&O positions to expiry riskier for those without delivery intent.

Pledge (Shares)

Pledging shares means offering them as collateral to a lender or broker in exchange for a loan or trading margin, while you continue to own them.

Retail traders pledge holdings to get margin for F&O, with a haircut applied to the value. Separately, promoters pledge their stake to raise loans, which is a closely watched risk: a falling price can trigger forced selling of the pledged promoter shares.

Pre-Open Session

The pre-open session is a 15-minute window before normal trading where orders are collected and an equilibrium opening price is discovered through a call auction.

On the NSE, the pre-open runs from 9:00 to 9:15 AM. It absorbs overnight news into a single opening price, reducing the wild volatility that an instant open would create. The discovered equilibrium price becomes the opening price for the regular session.

Preferential Allotment

Preferential allotment is the issuance of new shares by a listed company to a select group of investors (promoters, institutions, or strategic investors) at a SEBI-determined floor price.

SEBI regulations require the floor price to be computed from a weighted average of the last 26 weeks or 2 weeks of trading, whichever is higher. Preferential allotments can dilute existing minority shareholders and are therefore subject to shareholder approval via special resolution.

Premium (Options)

An option's premium is the price paid by the buyer to the seller for the right that the option grants, comprising intrinsic value and time value.

Premium is quoted per unit of the underlying. For a Nifty call option with a lot size of 75, if the premium is INR 100, the total cost per lot is INR 7,500. Premiums rise with higher volatility, longer time to expiry, and proximity to the strike price.

Price Band

The price band in an IPO is the range between the minimum (floor) and maximum (cap) price at which investors can bid for shares during the subscription period.

SEBI requires the cap of the price band to not exceed 120 percent of the floor price. Investors applying at the cut-off price agree to pay whatever the final issue price is within the band. Most Indian retail investors apply at the cut-off price to maximise allotment probability.

Price Discovery

Price discovery is the process by which the market arrives at a fair price for an asset through the interaction of buyers and sellers and their orders.

Continuous trading, the pre-open auction, and IPO book building are all price-discovery mechanisms. Liquid markets discover prices efficiently because many participants compete, while illiquid ones discover them poorly, leaving wide spreads and erratic moves.

Price-to-Sales Ratio (P/S)

The price-to-sales ratio compares a company's market capitalisation to its annual revenue, used to value firms that are not yet profitable.

P/S is a fallback when earnings are negative or erratic, common for young, fast-growing or loss-making companies where the P/E ratio is meaningless. A low P/S can flag value, but it ignores profitability entirely, so it must be read alongside margins and growth.

Promoter

A promoter is the individual, family, or entity that founded, controls, or has significant management influence over a listed Indian company.

SEBI defines promoters through its categorisation rules and requires disclosure of all promoter shareholdings. Most Indian listed companies have high promoter stakes (often 50 to 75 percent). Promoter buying is typically a bullish signal; promoter selling or pledging raises governance concerns.

Promoter Pledging

Promoter pledging is when a promoter pledges their company shares as collateral for personal or business loans, creating a risk that lenders may sell shares if the stock price falls.

High pledging (above 50 percent of promoter holding) is a red flag. If the stock price drops and the loan-to-value ratio breaches a threshold, lenders invoke pledge and dump shares in the market, triggering further price declines in a vicious cycle. SEBI mandates quarterly disclosure of pledged shares.

Put Option

A put option gives the buyer the right, but not the obligation, to sell an underlying asset at a fixed strike price on or before the expiry date.

Buying puts is a bearish strategy or a hedge for existing long positions. A Nifty put buyer profits when the index falls below the strike minus premium paid. In India, index put options are European-style and can only be exercised at expiry. Put options are widely used by FIIs and funds as portfolio insurance.

QIB (Qualified Institutional Buyer)

QIBs are SEBI-registered institutional investors, including mutual funds, FPIs, banks, and insurance companies, eligible for a reserved portion of IPO allocations.

SEBI mandates that at least 75 percent of the net offer in a main-board IPO must be allocated to QIBs. QIBs do not pay application money upfront before allotment. Their participation is seen as a quality signal for the IPO's prospects.

Rally

A rally is a sustained period of rising prices in a stock or index over days, weeks or months, often after a fall or on a fresh wave of buying.

A relief rally is a bounce within a downtrend, while a broad-based rally lifts most stocks together. Traders distinguish a durable rally, backed by strong breadth and volume, from a weak one that runs on thin participation and tends to fade.

Real Interest Rate

The real interest rate is the nominal interest rate minus inflation, showing the true return an investor earns after the erosion of purchasing power.

If a fixed deposit pays 7% while inflation runs at 5%, the real return is about 2%. When the repo rate sits comfortably above inflation, the real rate is positive, which the RBI watches as a sign that policy is genuinely restrictive rather than just nominally so.

Record Date

The record date is the cutoff date set by a company to determine which shareholders are eligible to receive a dividend, bonus, rights issue, or other corporate benefit.

Investors must have shares in their demat account and settled in their favour by the record date. Under T+1 settlement in India, shares bought on the trading day before the ex-date settle on the record date, making the ex-date the last day to buy and qualify.

Regular Plan

A regular plan of a mutual fund is bought through a distributor or advisor, who earns a trail commission, so its expense ratio is higher than the direct plan.

The commission baked into a regular plan's expense ratio lowers your net return over time compared with the direct plan of the same scheme. Regular plans suit investors who want hand-holding and advice; do-it-yourself investors usually prefer direct plans.

Repo Rate

The repo rate is the rate at which the RBI lends short-term funds to banks against government securities, the central policy rate, at 5.25% as of mid-2026.

The repo rate sets the floor under the entire interest-rate structure, so changes in it ripple into loan rates, deposit rates and stock valuations. A cut tends to lift equities and rate-sensitive sectors, while a hike does the reverse. The MPC reviews it bi-monthly.

Retail Quota

The retail quota in an IPO is the portion of shares reserved exclusively for individual investors applying for shares worth INR 2 lakh or less.

SEBI mandates a minimum 35 percent retail reservation in main-board IPOs. If the retail category is oversubscribed, allotment is done by computerised lottery ensuring one lot per unique applicant. Using multiple demat accounts to circumvent this is treated as fraudulent.

Reverse Repo Rate

The reverse repo rate is the rate at which the RBI borrows from banks, absorbing surplus cash, now largely superseded by the Standing Deposit Facility.

Historically the floor of the rate corridor, the reverse repo's active role was taken over by the Standing Deposit Facility (SDF) in 2022, which is 5.0% as of mid-2026. The reverse repo rate still exists on paper but is no longer the operative tool for draining liquidity.

RHP (Red Herring Prospectus)

The RHP is the final IPO document filed with SEBI and the stock exchanges after regulatory observations, containing the confirmed price band and all material information about the offering.

The RHP replaces the DRHP once SEBI issues its observations. All investors bidding in the IPO must read the RHP's risk factors, financials, and objects of the issue. The RHP is filed at least three days before the IPO opens.

Rights Issue

A rights issue is a corporate action offering existing shareholders the right to buy additional shares at a discounted price, in proportion to their current holding.

Shareholders who do not wish to participate can sell their rights entitlement in the market during the trading window. Rights issues dilute shareholders who do not subscribe. In India, rights issues are governed by SEBI's ICDR Regulations and require board and shareholder approval.

ROA (Return on Assets)

ROA measures how efficiently a company uses all its assets to generate net profit, calculated as net profit divided by average total assets.

ROA is particularly meaningful for asset-heavy industries like banking, infrastructure, and manufacturing. For Indian banks, ROA above 1 percent is considered healthy. Unlike ROE, ROA is not affected by financial leverage, making it more useful for cross-sector comparisons.

ROCE (Return on Capital Employed)

ROCE measures how efficiently a company generates profit from its total capital (equity plus debt), calculated as EBIT divided by capital employed.

ROCE is preferred over ROE for comparing companies with different capital structures. An ROCE above the cost of capital indicates value creation. Indian conglomerates and capital-intensive businesses like cement and steel are frequently evaluated on ROCE trends.

ROE (Return on Equity)

ROE measures a company's net profit as a percentage of shareholders' equity, showing how effectively it uses equity capital to generate earnings.

A sustained ROE above 15 percent is generally considered strong for Indian companies. High ROE driven by leverage (debt) rather than operating efficiency is a warning sign. ROE is decomposed using DuPont analysis into net margin, asset turnover, and leverage.

Rollover

Rollover is the process of closing a near-month futures position and simultaneously opening the same position in the next month's contract before expiry.

Rollover happens in the last week before expiry, typically the Tuesday and Wednesday before expiry Thursday. High rollover percentage (above 70 percent of the previous month's open interest) indicates continued market conviction in a trend. Rollover cost is determined by the basis between the two contracts.

SEBI (Securities and Exchange Board of India)

SEBI is India's capital markets regulator, established in 1992, responsible for protecting investors, developing the securities market, and regulating intermediaries.

SEBI regulates stock exchanges, mutual funds, brokers, investment advisers, and listed companies. It frames regulations like ICDR (for IPOs), LODR (for listed companies), PIT (for insider trading), and surveillance frameworks like ASM and GSM. SEBI's circulars are binding on all market participants.

Sectoral Index

A sectoral index tracks the performance of stocks belonging to a specific industry such as IT, pharma, banking, or FMCG, allowing focused market analysis.

NSE operates sectoral indices like Nifty IT, Nifty Pharma, Nifty FMCG, and Nifty Auto. These are widely used as benchmarks for sector-specific funds and to trade sector ETFs. Relative performance of sectoral indices versus Nifty 50 reveals sector rotation trends.

Sensex

The Sensex (S&P BSE Sensex) is BSE's benchmark index comprising 30 of India's largest and most actively traded stocks, computed since 1979.

Sensex is a free-float market-cap weighted index reviewed semi-annually. It is often used interchangeably with Nifty 50 as a proxy for Indian equity market performance, though slight divergences occur due to different constituent sets. Sensex futures and options trade on BSE.

Sharpe Ratio

The Sharpe ratio measures a fund's return earned per unit of risk taken, calculated as excess return over the risk-free rate divided by its volatility.

A higher Sharpe ratio means better risk-adjusted performance: more return for each unit of volatility endured. It lets you compare two funds fairly when one earned more but was also far more volatile. It is a core metric in mutual-fund factsheets and portfolio analysis.

Short Buildup

A short buildup in derivatives is when price falls along with rising open interest, signalling that fresh sellers are entering and backing the down-move.

It is read as a bearish signal because new short positions are driving the fall, not just longs exiting. The opposite, a long buildup, is price rising on rising open interest. Distinguishing the two reveals whether a move is backed by fresh conviction.

Short Covering

Short covering is when traders who had sold short buy back to close their positions, pushing the price up, often producing a sharp but sometimes short-lived rally.

In derivatives, short covering shows up as price rising while open interest falls, since sellers are fleeing rather than buyers arriving. A rally driven mainly by short covering can fade once the trapped sellers are done exiting, unlike one backed by a fresh long buildup.

SIP (Systematic Investment Plan)

A SIP is a method of investing a fixed amount in a mutual fund at regular intervals (weekly, monthly, or quarterly), enabling rupee-cost averaging.

SIP triggers automatic deduction from your bank account and purchases mutual fund units at the prevailing NAV on each instalment date. SIP reduces the risk of investing a lump sum at a market peak. AMFI data shows SIP monthly inflows crossing INR 20,000 crore in 2024.

Slippage

Slippage is the difference between the price you expected to trade at and the price you actually got, caused by fast markets or thin liquidity.

A market order in an illiquid stock or during a volatile move can fill well away from the last seen price, which is slippage. It is an often-overlooked cost on top of brokerage and taxes, and it is why limit orders and liquid instruments are preferred for large trades.

SPAN Margin

SPAN (Standard Portfolio Analysis of Risk) margin is the minimum initial margin required by exchanges for futures and written options positions, calculated via the SPAN algorithm.

SPAN uses 16 risk scenarios covering price and volatility changes to compute the worst-case one-day loss for a portfolio. It is recalculated twice a day on Indian exchanges. SPAN margin accounts for inter-contract and inter-product offsets, rewarding hedged positions with lower margin requirements.

Square Off

To square off is to close an open position by taking the opposite trade, selling what you bought or buying back what you sold, leaving no net exposure.

Intraday positions must be squared off before the market closes, or the broker auto-squares them. The term applies across equity, F&O and currency segments. Squaring off realises the profit or loss on the trade and removes any further price risk.

Standard Deviation

Standard deviation measures how widely a stock or fund's returns swing around their average, a core gauge of volatility and therefore of risk.

A higher standard deviation means returns are more spread out and the investment is more volatile. In mutual-fund analysis it feeds the Sharpe ratio. Two funds with the same average return but different standard deviations carry very different risk profiles.

Standing Deposit Facility (SDF)

The SDF is the window where banks park surplus cash with the RBI without needing collateral, forming the floor of the policy rate corridor at 5.0% as of mid-2026.

Introduced in April 2022, the SDF replaced the reverse repo as the RBI's main tool for absorbing surplus liquidity. It sits just below the repo rate. Together the SDF floor, the repo centre and the MSF ceiling define the corridor inside which the overnight rate moves.

Statutory Liquidity Ratio (SLR)

SLR is the share of its deposits a bank must hold in safe liquid assets like government bonds, cash or gold, which is 18.00% as of mid-2026.

Unlike CRR cash, SLR assets earn a return because government bonds pay interest, but the bank still cannot lend that portion. SLR has a statutory ceiling of 40% under the Banking Regulation Act and doubles as a way to ensure banks hold a buffer of government paper.

Stock Split

A stock split divides existing shares into multiple shares at a proportionally lower price, reducing the face value while leaving total market cap unchanged.

A 2:1 split doubles the number of shares and halves both the price and the face value. Companies like Infosys and TCS have done multiple splits to improve affordability and liquidity. Unlike a bonus issue, a split is not funded from reserves but is purely a mechanical division.

Stop Loss Order

A stop loss order automatically triggers a sell (or buy, for shorts) when the market price reaches a specified level, capping potential losses on an open position.

On NSE and BSE, stop loss orders are placed as SL or SL-M orders. An SL order has a trigger price and a limit price; it converts to a limit order once triggered. An SL-M order converts to a market order on trigger. Stop losses do not guarantee execution at the exact trigger price during fast moves.

STP (Systematic Transfer Plan)

An STP is a mutual fund facility that automatically moves a fixed amount or all gains from one scheme (usually liquid fund) to another (usually equity fund) at regular intervals.

Investors park a lump sum in a low-risk liquid fund and use STP to transfer to an equity fund over 6 to 12 months, achieving rupee-cost averaging while earning better returns than a savings account during the waiting period.

Strike Price

The strike price is the predetermined price at which the buyer of an option can exercise the right to buy (call) or sell (put) the underlying asset.

Strike prices for Nifty options are available at 50-point intervals; for Bank Nifty at 100-point intervals. An option is in-the-money when the underlying is above the strike (for calls) or below the strike (for puts). The relationship between strike and spot determines intrinsic value.

Sub-Broker

A sub-broker is an agent authorized by a registered broker to act as an intermediary between retail clients and the broker for executing trades on exchanges.

Sub-brokers in India are registered with SEBI and operate under the umbrella of their principal broker. SEBI has been phasing out the sub-broker category and replacing it with Authorised Persons (APs), who have a narrower regulatory scope but serve a similar function in smaller cities.

Surveillance (ASM/GSM)

Exchange surveillance is the ongoing monitoring of listed securities for unusual price movements, volume patterns, or corporate governance lapses that may indicate manipulation or fraud.

NSE and BSE conduct daily surveillance using automated systems that flag outliers in price-volume behaviour. Flagged securities may be placed under ASM, GSM, or periodic call auction (PCA) frameworks. SEBI can also direct exchanges to take action based on intelligence from investor complaints and media reports.

SWP (Systematic Withdrawal Plan)

An SWP is a mutual fund facility where you withdraw a fixed amount at regular intervals from your investment, providing a steady income stream.

Retirees in India use SWP from balanced advantage or debt funds to generate monthly cash flows. Each withdrawal redeems units at the prevailing NAV. Unlike a dividend option, SWP gives control over timing and amount. Capital gains tax applies on each redemption.

T+0 Settlement

T+0 settlement (same-day settlement) allows trades executed in the first half of the trading session to be settled on the same day, reducing counterparty risk.

SEBI introduced T+0 as an optional same-day settlement segment for top liquid NSE stocks in 2024, alongside the standard T+1 cycle. Shares and funds transfer on the same day by 4:30 PM. It is a stepping stone toward instant (T+0 or real-time) settlement.

T+1 Settlement

T+1 settlement means a stock trade is settled (shares and funds exchanged) on the next trading day after the trade date, which is the standard in India since 2023.

India moved all NSE and BSE equity market trades to T+1 settlement by January 2023, making it one of the fastest settlement cycles globally. T+1 means funds are released to sellers and shares reach buyers' demat accounts by the next business day end.

Theta

Theta is the rate at which an option loses value each day due to the passage of time, also called time decay.

Theta is negative for option buyers (time erodes the premium they paid) and positive for sellers (time decay accrues as profit). At-the-money options near expiry experience the fastest theta decay. In India's weekly options market, theta accelerates sharply in the last two days before expiry.

Time Value (Options)

Time value is the portion of an option's premium that exceeds its intrinsic value, reflecting the probability that the option will gain more intrinsic value before expiry.

Time value is highest for at-the-money options and declines to zero at expiry. Longer-dated options carry more time value. Volatility also inflates time value: higher India VIX leads to higher premiums even for out-of-the-money options.

Tracking Error

Tracking error measures how closely an index fund or ETF follows its benchmark, as the standard deviation of the difference between their returns.

A low tracking error means the fund mirrors its index tightly, which is the whole point of passive investing. Cash drag, fees and rebalancing costs cause tracking error. When choosing between two index funds on the same benchmark, lower tracking error is better.

UPI Mandate (IPO)

In IPOs, the UPI mandate allows retail investors to apply via their UPI ID, with the application amount blocked (not debited) from their bank account until allotment.

SEBI mandated UPI-based ASBA for retail IPO applications in 2019. The investor receives a collect request on their UPI app (BHIM, PhonePe, GPay, etc.) and approves it, blocking the funds. If not allotted, the block is released within 4 working days after listing.

Upper Circuit

An upper circuit is the maximum percentage rise allowed in a stock's price in a single trading session before further buying is halted at that level.

Once a stock hits its upper circuit (5, 10, or 20 percent depending on its band), only sell orders can be placed. In practice this means demand far exceeds supply and the stock freezes at the ceiling. Upper circuits on consecutive days often indicate an operator-driven or news-driven rally.

USD-INR

USD-INR is the exchange rate showing how many rupees one US dollar buys, where a rising number means a weaker rupee and a falling number a stronger one.

A weaker rupee lifts the rupee earnings of exporters like IT and pharma while raising costs for importers like oil refiners and airlines. A falling rupee often accompanies foreign outflows and feeds imported inflation, linking the currency to rates and the whole market.

Vega

Vega measures how much an option's premium changes for a 1 percentage point change in implied volatility of the underlying asset.

Options buyers benefit from rising volatility (higher vega exposure); sellers benefit from falling volatility. India VIX is closely watched as a proxy for Nifty option implied volatility. Long-dated options have higher vega sensitivity than near-expiry options.

Volatility

Volatility is the degree to which a price swings up and down over time, with high volatility meaning large, rapid moves and greater risk.

India VIX is the market's gauge of expected near-term Nifty volatility, sometimes called the fear index because it spikes in falling markets. Higher volatility raises option premiums and widens the range of likely outcomes, which matters for position sizing and risk.

VWAP (Volume Weighted Average Price)

VWAP is the average price at which a stock has traded throughout the day, weighted by the volume traded at each price level.

VWAP is used by institutional traders as a benchmark: executing below VWAP is considered a good buy; selling above VWAP is a good sell. In India, VWAP is also the reference price for block deal window pricing, block deal orders must be within 1 percent of VWAP.

Wholesale Price Index (WPI)

The WPI tracks the prices of goods at the wholesale or producer level, before they reach the retail consumer, a gauge of inflation in bulk transactions.

WPI has no services component and is dominated by manufactured goods and primary articles, which makes it more volatile than CPI. The RBI targets CPI, not WPI, because CPI reflects what households actually pay, but WPI is watched as an early signal of input-cost pressure.

XIRR (Extended Internal Rate of Return)

XIRR is the annualised return on an investment that involves irregular cash flows (like SIP instalments), accounting for the exact dates of each inflow and outflow.

Unlike CAGR, which assumes a single lump sum, XIRR is the correct metric for evaluating SIP returns or any portfolio with multiple dated cash flows. Most Indian mutual fund apps and fintech platforms display SIP returns as XIRR. A positive XIRR indicates the investment has grown in real terms.

Yield Curve

The yield curve plots the interest rates of government bonds across maturities, from short to long term, and its shape signals expectations about growth and rates.

A normal upward-sloping curve means longer bonds yield more than shorter ones. A flat or inverted curve, where short rates exceed long rates, has historically been a warning of slowing growth. The curve's shape reflects the market's view on future inflation and RBI policy.