CHAPTER - 5
Common market Jargons
To learn how the stock market works, one needs to understand some commonly used market jargon.
1. Bull market: If the stock market index (Nifty 50, Sensex) is going up for a specific period, the market is referred to be a bull market. Bulls control the market.
2. Bullish: If you believe that the share prices will go up over a period, you will be said to have a bullish view of the market.
3. Bulls: The market participants who believe that the share prices will go up over a period & take long positions.
4. Long positions: The long position is when the market participant buys shares with the expectation of a price increase.
5. Bear market: If the stock market index (Nifty 50, Sensex) is going down for a specific period, the market is referred to be a bear market. Bears control the market.
6. Bearish: If you believe that the share prices will go down over a period, you will be said to have a bearish view of the market.
7. Bears: The market participants who believe that the share prices will go down over a period & take short positions.
8. Short positions: The short position is when the market participant sells shares with the expectation of a price decrease.
9. Trend: It is the direction in which a broader market is moving. If the market is trading flat with no movement, the market is said to be sideways.
10. Face Value: In simple words, face value is the share price paid by the first shareholders or promoters of the company. It is the price at which the dividend is calculated. So if the FV is ₹10 & the company declares a dividend of 80%, the dividend amount will be 10*80% = ₹8 / share.
11. 52 week high/low: A 52-week high price is the highest price the share has traded in the past 52 weeks or a year. Conversely, a 52-week low price is the lowest price the share has traded over the previous 52 weeks or a year.
12. All-time high/low: The all-time high/low price concept is similar to 52 weeks high/low. The only difference is the time frame. All-time high or low price means the highest or lowest price of the stock from the period of its listing or a lifetime high or low price of the share.
13. Upper circuit/ lower circuit: The upper circuit or lower circuit are the price bands defined by a stock exchange; the share can trade between these price bands on a day. The upper circuit is the highest price at which the share can trade in a day. The lower circuit is the lowest price at which the share can trade in a day. The limit for the stock is set by the exchanges based on their criteria. For example, if the open price of the share is 500 & the limit set for the stock is 10% - the upper circuit will be at (500+10%) = ₹550, the lower circuit will be at (500 -10%) = ₹450
The share can trade between the price band of 550 – 450 on a day. The concept of upper circuit & lower circuit was introduced to control the extreme volatility in the market.
14. Gap-up opening: When the market or share opens at a price higher than the previous day's close price, it is a gap-up opening.
15. Gap-down opening: When the market or share opens at a price lower than the previous day's close price, it is a gap-down opening.
16. Unch: When the share trades at a price equal to the previous day's close, the price is said to remain unchanged.
17. Market Capitalization: The company's value (current market value of shares x total number of shares) on the stock market.
18. Dividend: It is the profit shared by the company with its shareholders.
19. Order: The order shows an intent to buy or sell shares.
20. Limit Order: A limit order is when the market participant intends to buy or sell shares at a predefined price different from the market price.
21. Market Order: Market order is when the market participant intends to buy or sell shares at a current market price.
22. Day order: If the order is valid only for that trading day, it's called a day order. If the share price does not hit the price mentioned in order on a trading day, the order automatically gets canceled.