Glossary

147 terms used across the lessons, each explained in a sentence or two. Acronyms show their expansion.

A

AMC(Asset Management Company)
The company that employs the fund managers and runs a mutual fund's investing. It manages the money but does not legally hold it.
AMFI(Association of Mutual Funds in India)
The mutual fund industry body. It publishes the market-cap classification list used to define large, mid and small cap.
AMO(After Market Order)
An order placed when the market is closed. It rests with your broker overnight and is sent to the exchange when trading opens.
Anchor investor
A large institutional investor allotted IPO shares one day before the issue opens, at a fixed price and with a lock-in period.
ASBA(Application Supported by Blocked Amount)
The system where IPO application money is blocked in your own bank account and debited only if shares are allotted.
Ask
The lowest price at which someone is currently willing to sell a share. Also called the offer.
ASM(Additional Surveillance Measure)
An exchange framework placing extra restrictions, such as higher margins, on stocks showing unusual price or volume behaviour.
AUM(Assets Under Management)
The total value of money a fund or AMC manages.

B

Basis of allotment
The published document showing how IPO shares were distributed among categories and applicants after the issue closed.
Benchmark
The index a fund is measured against. Since 2018 the comparison must use the Total Return Index.
BER(Base Expense Ratio)
Under the framework effective 1 April 2026, the AMC-controlled portion of a fund's costs, excluding statutory levies and brokerage.
Bid
The highest price at which someone is currently willing to buy a share.
Bid-ask spread
The gap between the best bid and the best ask. A wide spread signals poor liquidity and a higher cost to trade.
Bonus issue
Free additional shares issued to existing shareholders out of company reserves. Share count rises, price falls proportionately, total value is unchanged.
Book building
A price discovery method where investors bid within a published price band and the final issue price is set from the resulting book.
Book closure
A period during which a company closes its register of shareholders to update records for a corporate action.
BSDA(Basic Services Demat Account)
A demat account for small investors with nil or reduced annual maintenance charges, subject to a holding value limit.
BSE(Bombay Stock Exchange)
India's oldest stock exchange, founded in 1875, home of the Sensex index.
BTST(Buy Today Sell Tomorrow)
Selling shares before they are credited to your demat account, which carries a risk of auction settlement if delivery fails.
Buyback
A company purchasing its own shares from shareholders and cancelling them, reducing the number of shares outstanding.

C

CAGR(Compound Annual Growth Rate)
The annualised rate of return over a period longer than a year.
CAS(Closing Auction Session)
An auction at the end of the trading day used to discover the official closing price, replacing the earlier averaging method for covered stocks.
CDSL(Central Depository Services Limited)
One of India's two depositories, holding shares electronically in investors' demat accounts.
Circuit limit
The maximum a stock's price may move in a single day, measured from the previous close. Also called a price band.
Clearing corporation
The entity that stands between buyer and seller and guarantees settlement, removing the risk that your counterparty defaults.
CNC(Cash and Carry)
The delivery product type. You pay in full and the shares are credited to your demat account.
Consolidated Account Statement
A periodic statement showing every mutual fund holding across all AMCs, linked by PAN.
Contract note
The legal record of your trades for a day, emailed by your broker, showing every trade with its price, time and full charge breakdown.
Corporate action
Any action by a company that mechanically affects its shares, such as a dividend, bonus, split, rights issue, buyback or merger.
Custodian
The institution that holds a mutual fund scheme's securities, separate from the AMC that manages them.
Cut-off price
The final issue price in a book-built IPO. Also the retail option to accept whatever that final price turns out to be.

D

Delisting
Removal of a company's shares from an exchange, after which they no longer trade publicly.
Demat account
An account with NSDL or CDSL that holds your shares electronically in your own name.
Demerger
A company separating a business into a new, separately listed company, with shares distributed to existing shareholders.
Depository
An institution holding securities in electronic form. India has two: NSDL and CDSL.
Direct plan
A mutual fund plan bought without a distributor, so no commission is paid and the expense ratio is lower than the regular plan of the same scheme.
Dividend
Cash paid to shareholders out of company profits. Declared as a percentage of face value, not of the share price.
Dividend yield
Annual dividend per share divided by the current share price, expressed as a percentage.
DP(Depository Participant)
The agent, usually your broker, through which your demat account with a depository is opened and operated.
DP charge
A flat fee charged per stock per day when shares leave your demat account on a sale, regardless of the value sold.
Drawdown
The fall from a peak to a subsequent trough. Maximum drawdown shows the worst decline an investor would have had to sit through.
DRHP(Draft Red Herring Prospectus)
The first IPO offer document filed with SEBI. Contains business, financial and risk detail but no price or dates.

E

ELSS(Equity Linked Savings Scheme)
An equity mutual fund with a three-year lock-in, eligible for the specified-savings deduction in the old tax regime (Section 123 of the Income-tax Act, 2025, formerly Section 80C).
Equilibrium price
In an auction, the single price at which the maximum quantity of shares can be matched.
ETF(Exchange Traded Fund)
A fund that tracks an index and trades on the exchange like a share. Requires a demat account.
Ex-date
The first day a share trades without entitlement to a corporate action. To receive the benefit you must buy before this date.
Exit load
A charge deducted from redemption proceeds when units are redeemed within a defined period, retained by the scheme.

F

Face value
The nominal accounting value of a share, commonly ₹1, ₹2, ₹5 or ₹10. Unrelated to the market price.
Factsheet
A monthly one- or two-page document per scheme showing portfolio, costs, returns, risk measures and fund manager details.
FoF(Fund of Funds)
A mutual fund that invests in other mutual funds rather than directly in securities.
Folio
Your account number with a mutual fund house, under which your units are held. No demat account is needed for ordinary schemes.
FPO(Follow-on Public Offer)
A further public issue of shares by a company that is already listed.
Free float
The portion of a company's shares genuinely available for public trading, excluding promoter and other locked holdings.
Fresh issue
The portion of an IPO consisting of newly created shares, where the money goes to the company.

G

GMP(Grey Market Premium)
An unofficial, unregulated indication of what an IPO might list at, from an informal market with small volumes and no legal standing.
Growth option
The scheme option where gains stay invested and are reflected in a rising NAV, rather than being paid out.
GSM(Graded Surveillance Measure)
An exchange framework applying graded restrictions to stocks with weak fundamentals or unusual price behaviour.
GTT(Good Till Triggered)
A standing instruction held by your broker, valid for up to about a year, that creates a real order only when your trigger condition is met.

I

IDCW(Income Distribution cum Capital Withdrawal)
The payout option, formerly called dividend. NAV falls by exactly the amount distributed, and the payout is taxed at slab rate.
IEPF(Investor Education and Protection Fund)
The fund to which unclaimed dividends and shares are transferred after a prescribed period, from which they can be reclaimed.
Index
A single number summarising the price movement of a chosen basket of stocks, such as the Nifty 50 or the Sensex.
Index fund
A passive mutual fund holding an index's constituents in index proportion, bought and redeemed at NAV.
India VIX
An index of expected market volatility over the next 30 days, derived from Nifty options prices. It indicates expected movement, not direction.
Intraday
A position opened and closed within the same trading day.
IOC(Immediate or Cancel)
An order validity where any part that cannot execute immediately is cancelled at once.
IPO(Initial Public Offering)
A company's first sale of shares to the public, after which it is listed on a stock exchange.
ISIN
A unique international identification number assigned to each security.

K

KIM(Key Information Memorandum)
The abridged version of a mutual fund scheme's information document.
KYC(Know Your Customer)
The one-time identity verification required before investing, valid across the industry once completed.

L

Limit order
An order that executes only at your specified price or better. It protects your price but may not execute at all.
Liquidity
How easily a share can be bought or sold in reasonable quantity without materially moving its price.
Listing price
The price discovered in the special pre-open auction on the day a new stock begins trading.
Lock-in
A period during which certain shares, such as those held by anchor investors or promoters, cannot be sold.
LODR(Listing Obligations and Disclosure Requirements)
SEBI regulations setting out what a listed company must disclose, and when.
Lot size
The fixed number of shares that forms one unit of application in an IPO, or one unit of trading in certain segments.
LTCG(Long Term Capital Gain)
Gain on an asset held beyond the qualifying period, taxed at a different rate from short-term gains.

M

Macaulay duration
A measure of a debt portfolio's sensitivity to interest rate changes. Longer duration means larger NAV movement when rates change.
Market capitalisation
Share price multiplied by the total number of shares — the market's valuation of the whole company.
Market depth
The table of pending buy and sell orders at successive price levels, showing how much quantity rests near the current price.
Market order
An order to execute immediately at the best available price. Execution is near certain, but the price is not.
Merger
Two or more companies combining, with shareholders of the absorbed company receiving shares in the surviving one at a fixed swap ratio.
MIS(Margin Intraday Square-off)
A leveraged intraday product type. The position must be closed the same day or the broker squares it off automatically.

N

NACH mandate
The bank authorisation that allows automatic debits for a SIP. It must be registered and approved before the first instalment.
NCLT(National Company Law Tribunal)
The tribunal that sanctions schemes of arrangement such as mergers and demergers.
NFO(New Fund Offer)
The initial subscription period for a new mutual fund scheme, usually at ₹10 per unit. It has no track record.
Nifty 50
NSE's benchmark index of 50 large, liquid Indian companies, weighted by free-float market capitalisation.
NII(Non-Institutional Investor)
An IPO category for applications above ₹2 lakh, also called the HNI category.
Nominee
The person you designate to receive your securities if you die. Nominating dramatically simplifies transmission for your family.
NRML(Normal)
A product type allowing positions, mainly in derivatives, to be carried overnight at full exchange margin.
NSDL(National Securities Depository Limited)
One of India's two depositories, holding shares electronically in investors' demat accounts.
NSE(National Stock Exchange)
India's largest stock exchange by volume in most segments, home of the Nifty indices.

O

OCO(One Cancels the Other)
A paired instruction, usually a target and a stop-loss, where the triggering of one cancels the other.
OFS(Offer for Sale)
The portion of an IPO where existing shareholders sell their own shares. The proceeds go to them, not to the company.
Open-ended fund
A scheme you can buy or redeem on any business day at that day's NAV. Most Indian mutual funds are open-ended.
Order book
The live list of all unexecuted buy and sell orders in a stock, matched by price priority and then time priority.
Oversubscription
When applications in an IPO exceed the shares on offer. It measures demand, not value.

P

PAN(Permanent Account Number)
The tax identification number mandatory for every securities market account in India.
Pledge
Offering your shares as collateral to receive margin, with a haircut applied. The shares remain yours.
Post-closing session
A short window after the close during which orders can be placed at the day's closing price.
Pre-open session
An auction from 9:00 to 9:15 AM that discovers the day's opening price before continuous trading begins.
Price band
In trading, the daily permitted price range for a stock. In an IPO, the range within which investors may bid.
Primary market
Where a company issues new shares and receives the proceeds, as in an IPO or rights issue.
Promoter
The founder or controlling shareholder group of a company, subject to separate disclosure and lock-in rules.

Q

QIB(Qualified Institutional Buyer)
An institutional investor category in an IPO, including mutual funds, insurers, banks and foreign portfolio investors.

R

RE(Rights Entitlement)
A tradeable instrument credited to your demat account in a rights issue, which lapses worthless if neither exercised nor sold.
Record date
The date on which a company checks its register of shareholders to determine who receives a corporate action.
Regular plan
A mutual fund plan bought through a distributor, whose commission is paid out of a higher expense ratio.
Reverse split
Several shares consolidated into one, with face value rising proportionately. Total value is unchanged.
RHP(Red Herring Prospectus)
The near-final IPO offer document, adding the price band, lot size and issue dates after SEBI's observations.
Rights issue
A company raising fresh capital by offering existing shareholders new shares at a discount, in proportion to their holding.
RII(Retail Individual Investor)
An IPO category for individual applications up to ₹2 lakh.
Riskometer
A six-level risk indicator every mutual fund scheme must display, from Low to Very High, reviewed monthly.
Rolling returns
Returns computed over every possible window of a given length, removing the influence of a favourable start date.
RTA(Registrar and Transfer Agent)
The agent that maintains a company's shareholder register and processes allotments, dividends and other corporate actions.
Rupee cost averaging
The effect where a fixed investment amount buys more units when prices are low and fewer when high, lowering average cost.

S

SCORES
SEBI's online platform for lodging and tracking investor complaints against market intermediaries and listed companies.
SEBI(Securities and Exchange Board of India)
The regulator of the Indian securities market, responsible for the rules, supervision and enforcement.
Secondary market
The exchange, where investors trade existing shares among themselves. The company receives nothing from these trades.
Sensex
BSE's benchmark index of 30 large Indian companies, weighted by free-float market capitalisation.
Settlement
The process of exchanging money for shares after a trade. Indian equities settle on a T+1 cycle as standard.
SID(Scheme Information Document)
The full legal document for a mutual fund scheme, including its binding asset allocation limits and exit load structure.
SIP(Systematic Investment Plan)
An instruction to invest a fixed amount at a fixed interval into a chosen scheme. A payment method, not a product.
SL(Stop-Loss Limit)
An order that becomes a limit order when the trigger price is reached, controlling the exit price but risking non-execution.
SL-M(Stop-Loss Market)
An order that becomes a market order when the trigger price is reached. Execution is near certain, at an uncontrolled price.
Slippage
The difference between the price you expected and the price you actually got, most often on market orders in thin stocks.
SME IPO
A public issue on the NSE Emerge or BSE SME platform, with relaxed eligibility, larger minimum application sizes and higher risk.
Stock split
Each share divided into several, with face value reduced proportionately. Total value is unchanged.
STP(Systematic Transfer Plan)
An instruction to move a fixed amount at regular intervals from one scheme to another. Each transfer is a taxable redemption.
STT(Securities Transaction Tax)
A tax levied on securities transactions, deducted automatically and shown in your contract note.
Swap ratio
The fixed ratio at which shares of a merging company are exchanged for shares of the surviving company.
SWP(Systematic Withdrawal Plan)
An instruction to redeem a fixed amount at regular intervals, credited to your bank account.

T

T+1
The standard Indian settlement cycle, where money and shares change hands on the trading day after the trade.
Tender offer
A buyback route where the company offers to purchase a fixed number of shares at a fixed price from shareholders on the record date.
TER(Total Expense Ratio)
The annual percentage a fund charges, accrued daily and already reflected in the NAV you see.
Tick size
The smallest permitted price increment for an order. An order at a price between ticks is rejected.
Tracking error
How closely a passive fund follows its index. Lower is better.
Trading account
The account through which you place orders. It holds nothing long term; shares go to your demat account.
Trailing stop-loss
A stop-loss that moves in your favour as the price advances but never moves against you.
TRI(Total Return Index)
An index version that includes dividends from constituents, used as the fair benchmark for fund performance.
Trigger price
The price at which a dormant stop-loss order activates and is sent to the exchange.
Trustee
The entity holding a mutual fund's assets in trust for unit holders and supervising the AMC.

U

UPI mandate
The block-funds request you approve in your UPI app when applying for an IPO. An unapproved mandate voids the application.

V

VWAP(Volume Weighted Average Price)
An average price weighted by traded quantity, used as a reference in closing price calculation and in execution benchmarks.

X

XIRR
The correct return measure for a SIP, because it accounts for money invested at many different dates.

Y

YTM(Yield to Maturity)
An indication of a debt portfolio's yield. An unusually high YTM signals riskier holdings, not a better fund.