Free learning library

Stock market terms glossary: plain meanings, with examples

This glossary explains 60 words you will meet as a beginner in the Indian stock market. Each term gets one plain line. For 15 of the most used terms, there is also a short example using ABC Limited, a made-up mobile company. Terms are grouped by theme, and each group links to the lesson that explains that theme in depth. Nothing here tells you what to buy or sell.

How to use this glossary

Read one group at a time, or jump to the word you need. Each definition is short on purpose. When a group makes sense, open the linked lesson for the full picture.

The words are grouped in the order a beginner usually meets them: first the accounts you open, then the orders you place, then the prices you see, then what companies publish and do, and finally indices and risk. All examples use made-up companies, ABC Limited, XYZ Foods and PQR Motors, and made-up numbers. They are not real shares and not suggestions.

If you are completely new, start with stock market basics for beginners, then come back here whenever a word stops you.

Accounts and the people who run them

To own shares in India you need a demat account to hold them, a trading account to place orders and a bank account for money, all opened after KYC with your PAN. Full lesson: demat account explained. How these parties work together: how the stock market works.

Demat account: An electronic account that holds the shares and other securities you own. Example: Your demat account shows "ABC Limited: 10 shares" after settlement.
Trading account: The account with a stockbroker that you use to place buy and sell orders.
Stockbroker: A SEBI-registered firm that is a member of an exchange and places orders for you.
Depository: An organisation that keeps electronic records of who owns which securities. India has two: NSDL and CDSL.
Depository participant (DP): A SEBI-registered firm, often your broker or bank, through which you open and run a demat account.
BO ID: Beneficial owner identification number: your 16-character demat account number.
KYC: Know your customer: the identity and address checks you complete before opening an account.
PAN: Permanent Account Number from the Income Tax Department, required for a demat account.
Nominee: The person you name to receive the securities in your account after your death.
CAS: Consolidated Account Statement: one statement from the depositories covering all demat accounts and mutual fund holdings linked to your PAN. Example: Arun's CAS shows 10 ABC shares at Rs 250 and 25 XYZ Foods shares at Rs 80, total Rs 4,500.

Orders and how trades happen

An order is your instruction to buy or sell. The order type decides whether it fills right away, at what price, and how long it waits. Full lesson: market order vs limit order.

Market order: An order to buy or sell immediately at the prices available now. Example: A market buy for 100 ABC shares fills 40 at Rs 251 and 60 at Rs 251.50, average Rs 251.30.
Limit order: An order to buy or sell only at a price you set, or better. Example: A limit buy at Rs 250 for ABC waits until a seller offers Rs 250 or less.
Stop-loss order (SL): An order that waits for a trigger price, then becomes a limit order. Example: Trigger Rs 240, limit Rs 238: once ABC trades at Rs 240, a sell at Rs 238 or more goes live.
Stop-loss market (SL-M): An order that waits for a trigger price, then becomes a market order.
Trigger price: The price that activates a stop-loss order.
After-market order (AMO): An order placed while the market is closed, held by your broker and sent when trading opens.
Delivery trade: A purchase you hold, with shares settled into your demat account.
Intraday trade: A position opened and closed on the same trading day, so no shares are delivered.
DAY order: An order that stays live until it fills, is cancelled, or the trading day ends.
IOC order: Immediate or cancel: fills what it can at once and cancels the rest. Example: An IOC limit buy for 50 ABC at Rs 251 with 40 available fills 40 and cancels 10.
Contract note: The formal record your broker sends after a trade, showing price, quantity and charges.

Prices and the order book

A share price is the price of the latest trade. It sits between what buyers are bidding and what sellers are asking, and it changes as orders arrive. Full lesson: why share prices change.

Last traded price (LTP): The price of the most recent trade in a share.
Bid: The price a waiting buyer is willing to pay. The highest bid is the most any buyer is offering right now.
Ask (offer): The price a waiting seller is willing to accept. The lowest ask is the cheapest any seller is offering right now.
Spread: The gap between the highest bid and the lowest ask. Example: ABC bid Rs 250.50, ask Rs 251.00: the spread is Rs 0.50.
Order book: The list of all waiting buy and sell orders for a share, by price.
Volume: The number of shares traded in a period, such as a day.
Liquidity: How easily a share can be bought or sold without moving its price much.
Price band (circuit): A limit set by the exchange on how far the price of many shares can move in a day. Shares that have futures and options trading usually have no fixed band.
Open, high, low, close: The first, highest, lowest and final prices of a share for a trading day.
Market capitalisation: The total market value of a company's shares: share price times number of shares. Example: ABC has 10 crore shares at Rs 250, so its market capitalisation is Rs 2,500 crore.

Company reports and numbers

Listed companies publish their results regularly. A few words, such as revenue, profit and EPS, let you read the headline numbers. Full lessons: how to read quarterly results and P/E ratio explained.

Revenue: The money a company earns from its business before costs are taken out.
Net profit: What is left from revenue after all costs, interest and taxes.
Quarterly results: The financial results a listed company publishes for each three-month period.
Annual report: The yearly document with a company's full accounts, business review and governance details.
EPS: Earnings per share: net profit divided by the number of shares. Example: ABC earns Rs 200 crore net profit on 10 crore shares, so EPS is Rs 20.
P/E ratio: Share price divided by earnings per share. Example: At Rs 250 a share and EPS of Rs 20, ABC's P/E is 12.5.
Book value: A company's assets minus its liabilities, as shown in its accounts.

Try it: the MarketMind Challenge

Reading about prices is one thing. Watching how you react when a made-up price moves is another. The MarketMind Challenge is a short practice game on our main page. You play the first two missions free, with made-up companies and practice money. You do not pay or open an account.

Play the free missions

Corporate actions

A corporate action is a step a company takes that changes something for its shareholders, such as paying a dividend, issuing bonus shares or splitting its shares. Full lessons: dividend, bonus and split explained and what is an IPO.

Dividend: A part of profit paid to shareholders, if the company decides to pay one. Example: A Rs 5 dividend on 10 ABC shares pays Rs 50, before any tax.
Record date: The date on which the company checks who its shareholders are for a benefit such as a dividend.
Ex-date: The date from which a buyer of the share no longer gets the announced benefit.
Bonus issue: Free extra shares given to existing shareholders in a fixed ratio. Example: A 1:1 bonus turns 10 ABC shares into 20, and the price per share adjusts down.
Stock split: Dividing each share into more shares of a smaller face value. Example: A 1-into-2 split turns 10 ABC shares into 20, with the price roughly halved.
Face value: The nominal value printed for each share in the company's records, different from its market price.
Rights issue: An offer to existing shareholders to buy new shares, usually at a set price.
Buyback: When a company buys its own shares back from shareholders.
IPO: Initial Public Offering: a company's first offer of shares to the public.

Indices

An index is one number that summarises the prices of a group of shares. It tells you how that group moved, not how any single share moved. Full lesson: Nifty and Sensex explained.

Index: One number that tracks the prices of a chosen group of shares, reviewed from time to time.
Nifty 50: An NSE index that tracks 50 large companies listed on NSE.
Sensex: A BSE index that tracks 30 large companies listed on BSE.
Index fund and ETF: Funds that try to copy an index. An ETF (exchange-traded fund) trades on the exchange like a share.

Risk and rules

Every share purchase carries the risk of loss. These words describe that risk, the tools that make it larger, and the regulator that sets the rules. Background: stock market basics for beginners and fundamental vs technical analysis.

Market risk: The chance of loss because prices fall. Example: Buy 10 ABC at Rs 250, price falls to Rs 220: the paper loss is Rs 300, plus charges.
Volatility: How much and how quickly a price moves up and down.
Diversification: Spreading money across different companies or assets so one bad result does not hit everything.
Margin: Money you or your broker must keep as a deposit for a trade. It can make gains and losses larger.
Leverage: Trading a larger amount than the money you put in. It magnifies both gains and losses.
Derivatives (F&O): Contracts, such as futures and options, whose value depends on another asset. They are complex and carry high risk.
Settlement (T+1): The transfer of shares and money after a trade, one trading day after the trade day in most cases. Example: Buy ABC on Monday, and the shares reach your demat account on Tuesday.
SEBI: The Securities and Exchange Board of India, the regulator of the securities market.
SCORES: SEBI's online platform for complaints against listed companies and SEBI-registered entities.

Losses are always possible in the stock market, including on shares of well-known companies. Learning these words helps you understand what you are doing. It does not promise any profit.

Common mix-ups

Some pairs of words sound alike but mean very different things. Here are five that beginners often swap, each corrected.

Face value vs market price. Face value is a fixed accounting figure, often small. The market price is what buyers pay today. ABC could have a face value of Rs 10 and trade at Rs 250.
Bonus vs split. Both give you more shares without paying, and in both the price per share adjusts down. A bonus is issued out of the company's reserves, while a split divides the face value. The total value of your holding does not jump because of either.
Record date vs ex-date. The ex-date is the one that matters for buyers: buy on or after it, and you do not get that benefit.
Index vs share. You cannot buy the Nifty 50 itself. You can buy shares, or a fund that tries to copy the index.
Market capitalisation vs company size by revenue. Market capitalisation is the market's price for all the shares. Revenue is what the business earns. A company can rank high on one and low on the other.

Check yourself and where to verify

Three quick questions using the glossary, with answers right after each, then the official websites to confirm the terms.

PQR Motors has 5 crore shares trading at Rs 120. What is its market capitalisation?
Answer: 5 crore x Rs 120 = Rs 600 crore.
XYZ Foods has a highest bid of Rs 79.50 and a lowest ask of Rs 80.25. What is the spread?
Answer: Rs 80.25 minus Rs 79.50 = Rs 0.75.
You hold 30 ABC shares and the company announces a 1:1 bonus. How many shares do you have after it?
Answer: 60, and the price per share adjusts down.

Want to try these ideas with practice money and a made-up company? Play the free MarketMind Challenge.

Questions people ask

What are the most important stock market terms for a beginner?

Start with share, demat account, trading account, order, market order, limit order, bid, ask, index and T+1 settlement. These cover holding, buying and reading prices.

What is the difference between bid and ask?

The bid is the price a waiting buyer will pay. The ask is the price a waiting seller will accept. A trade happens when a buyer and a seller agree on a price.

What does T+1 mean?

T is the trade day. T+1 means the shares and money are settled one trading day later. Most equity trades in India settle on T+1.

Is face value the same as share price?

No. Face value is a fixed figure in the company's records. The share price is what buyers pay in the market and changes during the day.

Who is ABC Limited?

No one. ABC Limited is a made-up company used only to explain ideas. It is not a real share and not a suggestion.

Want to learn this with a mentor?

Vinoth Kumar S, the MarketMind mentor — **Vinoth Kumar S**Your mentor, ChennaiInvesting since 2005. MBA, NISM Research Analyst certification.

This page is free to read, and you are welcome to share the link. If you would like to go further, MarketMind is a live online course for complete beginners: 12 classes of 2 hours over 6 weeks, taught in Tamil and English, with a course fee of Rs 5,999. The December batch starts on Saturday, 5 December 2026, and a new batch starts every month. There is no need to decide today.

See the December batch Read the full syllabus