Indian Stock Market Glossary

PE Ratio

Price divided by earnings per share — shows how much investors pay per ₹1 of profit.

PB Ratio

Price divided by book value per share — compares market price to net asset value.

Earnings Per Share

Net profit divided by total shares — profit attributable to each share.

Return on Equity

Net profit as a percentage of shareholder equity — measures capital efficiency.

Return on Capital Employed

EBIT as a percentage of capital employed — measures total capital efficiency including debt.

Debt-to-Equity Ratio

Total debt divided by shareholder equity — measures financial leverage.

Market Capitalisation

Total shares × current price — the total market value of a company.

EBITDA

Earnings before interest, tax, depreciation and amortisation — proxy for operating cash flow.

Net Profit Margin

Net profit as a percentage of revenue — shows what portion of sales becomes profit.

Free Cash Flow

Operating cash flow minus capex — actual cash available after maintaining business.

Dividend Yield

Annual dividend per share ÷ stock price — income return from holding a stock.

Book Value Per Share

Net assets (equity) divided by shares outstanding — accounting value per share.

Working Capital

Current assets minus current liabilities — the buffer for day-to-day operations.

Current Ratio

Current assets ÷ current liabilities — measures short-term liquidity.

Quick Ratio

(Current assets − inventory) ÷ current liabilities — stricter liquidity test.

PEG Ratio

PE divided by EPS growth rate — adjusts PE for expected growth.

Face Value

The nominal value of a share set at issuance — typically ₹1, ₹2, or ₹10.

Enterprise Value

Market cap + net debt — total value of the business regardless of capital structure.

EV/EBITDA

Enterprise value divided by EBITDA — capital-structure-neutral valuation multiple.

Price-to-Sales Ratio

Market cap divided by annual revenue — useful when profits are zero or negative.

Return on Assets

Net profit divided by total assets — measures how efficiently assets generate profit.

Interest Coverage Ratio

EBIT divided by interest expense — shows ability to service debt.

Gross Profit Margin

(Revenue − cost of goods sold) ÷ revenue — measures production profitability.

Operating Profit Margin

Operating profit (EBIT) ÷ revenue — shows efficiency before interest and tax.

Revenue Growth

Percentage increase in total sales versus a prior period.

Earnings Yield

EPS ÷ share price — the inverse of PE ratio, comparable to bond yields.

Cash Conversion Cycle

Days to convert inventory & receivables to cash — measures working capital efficiency.

Asset Turnover Ratio

Revenue divided by total assets — measures how efficiently assets generate sales.

Promoter Holding

Percentage of shares held by founders/controlling shareholders.

Share Pledge

Shares pledged as collateral for loans — high pledge signals financial stress.

RSI (Relative Strength Index)

Momentum oscillator from 0–100 — above 70 is overbought, below 30 is oversold.

MACD

Moving average convergence/divergence — trend-following momentum indicator.

Simple Moving Average

Average closing price over N periods — smooths price data to show trend direction.

Exponential Moving Average

Weighted moving average that gives more importance to recent prices.

Bollinger Bands

Three bands (SMA ± 2 standard deviations) that expand/contract with volatility.

Support Level

A price floor where buying demand historically stops a decline.

Resistance Level

A price ceiling where selling pressure historically halts an advance.

Breakout

Price moving decisively beyond a support or resistance level on above-average volume.

Golden Cross

50-day SMA crossing above 200-day SMA — a major bullish trend signal.

Death Cross

50-day SMA crossing below 200-day SMA — a major bearish trend signal.

Fibonacci Retracement

Horizontal lines at key Fibonacci levels (23.6%, 38.2%, 50%, 61.8%) marking potential support/resistance.

Average True Range

Average daily price range — measures market volatility.

On-Balance Volume

Cumulative volume indicator — rising OBV confirms uptrends; falling OBV warns of distribution.

Stochastic Oscillator

Momentum indicator comparing closing price to price range — signals overbought/oversold.

Candlestick Chart

OHLC price chart using candles — body shows open/close, wicks show high/low.

Trading Volume

Number of shares traded in a period — confirms price move validity.

Pivot Points

Mathematical price levels calculated from prior day's OHLC — key S/R levels for intraday trading.

Head and Shoulders Pattern

Reversal pattern with three peaks — middle peak (head) higher than two shoulders.

Cup and Handle Pattern

Bullish continuation pattern — rounded bottom (cup) followed by brief consolidation (handle).

Relative Strength

A stock's performance versus a benchmark index — identifies market leaders and laggards.

Bull Market

A sustained period of rising asset prices — generally a 20%+ rise from recent lows.

Bear Market

A sustained period of falling asset prices — generally a 20%+ decline from recent highs.

Circuit Breaker

Automatic trading halt triggered when indices fall by 10%, 15%, or 20%.

Nifty 50

NSE's flagship index of the 50 largest Indian companies by free-float market cap.

Sensex

BSE's benchmark index of 30 large-cap Indian companies — India's oldest index (1986).

SEBI

Securities and Exchange Board of India — the market regulator for all securities in India.

FII / FPI

Foreign Institutional Investors — overseas funds investing in Indian markets.

DII

Domestic Institutional Investors — Indian insurance companies, mutual funds, and pension funds.

IPO

Initial Public Offering — a company's first sale of shares to the public.

FPO

Follow-on Public Offer — additional shares sold to the public by an already-listed company.

Mutual Fund

Pooled investment vehicle professionally managed under SEBI's regulatory framework.

ETF

Exchange-Traded Fund — a basket of securities that trades on a stock exchange like a share.

Index Fund

Passively managed fund that replicates an index — minimal cost, broad diversification.

SIP

Systematic Investment Plan — fixed periodic investments in mutual funds.

NAV

Net Asset Value — total assets minus liabilities of a fund, divided by units outstanding.

AUM

Assets Under Management — total market value of assets managed by a fund or firm.

Short Selling

Selling borrowed shares expecting price to fall — profit from price decline.

Arbitrage

Simultaneous buy/sell of the same asset in different markets to profit from price differences.

Liquidity

Ease of buying/selling an asset quickly at fair price without significantly moving the market.

Volatility

Degree of price fluctuation — measured by standard deviation or India VIX.

Beta

Measure of a stock's price sensitivity relative to the market — beta >1 means more volatile.

Alpha

Returns generated above and beyond the market benchmark — the value added by active management.

Bid-Ask Spread

Difference between best buy price (bid) and best sell price (ask) — the cost of immediate execution.

Market Order

Order to buy/sell immediately at the best available market price.

Limit Order

Order to buy/sell only at a specified price or better — controls execution price.

Futures Contract

Binding agreement to buy/sell an asset at a fixed price on a future date.

Call Option

Right (not obligation) to buy an asset at a fixed strike price before expiry.

Put Option

Right (not obligation) to sell an asset at a fixed strike price before expiry.

REIT

Real Estate Investment Trust — listed fund owning income-producing properties.

InvIT

Infrastructure Investment Trust — listed fund owning revenue-generating infrastructure assets.

NCD

Non-Convertible Debenture — fixed-income bond that cannot be converted to equity.

Debenture

Unsecured long-term debt instrument issued by a company — backed only by creditworthiness.

Preference Share

Hybrid security with fixed dividend priority over equity but subordinate to debt.

Rights Issue

Offer to existing shareholders to buy new shares at a discount — proportional to current holdings.

Convertible Bond

Bond that can be converted into equity shares at a predetermined price.

Dividend

Cash distribution from company profits to shareholders.

Bonus Share

Free additional shares issued to existing shareholders from company reserves.

Stock Split

Dividing existing shares into multiple shares — reduces price per share, increases count.

Share Buyback

Company repurchasing its own shares — reduces share count, increases EPS.

ESOP

Employee Stock Option Plan — grants employees the right to buy company shares at a set price.

Merger & Acquisition

Consolidation of companies through purchase or combination.

Demerger

Splitting one company into two or more separate listed entities.

Delisting

Removal of a company's shares from a stock exchange — voluntary or compulsory.

52-Week High

Highest price a stock has traded at in the past 52 weeks — a key technical reference.

52-Week Low

Lowest price a stock has traded at in the past 52 weeks — a contrarian reference.

Portfolio

A collection of investments held by an individual or institution.

Diversification

Spreading investments across different assets/sectors to reduce concentration risk.

Hedging

Taking an offsetting position to reduce risk — insurance against adverse price moves.

Derivative

Financial instrument whose value derives from an underlying asset — futures, options, swaps.