The stock market can feel overwhelming for beginners because of the many terms and jargons used by traders and investors. But don’t worry — once you understand the basic stock market terminology, it becomes much easier to follow the market and make better investment decisions.

Here’s a complete guide to the most common stock market terms you need to know:

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🔹 1. Stock / Share

A stock or share represents ownership in a company. When you buy a company’s share, you become a shareholder, which means you own a small portion of that company.

Example: If you buy Reliance shares, you become part-owner of Reliance Industries.

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🔹 2. Equity

Equity is another word for ownership in a company. When we say “equity market,” we are referring to the stock market where shares are traded.

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🔹 3. IPO (Initial Public Offering)

When a private company decides to raise money from the public for the first time, it issues an IPO. After the IPO, the company’s shares are listed on stock exchanges like NSE and BSE.

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🔹 4. Bull Market

A bull market means the stock prices are rising, and investors are optimistic.

Symbol: Bull = charging upwards 🐂

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🔹 5. Bear Market

A bear market means stock prices are falling, and investors are pessimistic.

Symbol: Bear = swiping downwards 🐻

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🔹 6. Market Capitalization (Market Cap)

It is the total value of a company’s outstanding shares.
Formula: Share Price × Total Number of Shares

• Large Cap = Big companies (e.g., TCS, Infosys)
• Mid Cap = Medium-sized companies
• Small Cap = Small-sized companies

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🔹 7. Dividend

A dividend is a portion of profit that a company pays to its shareholders. It is like a reward for investing in the company.

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🔹 8. Index (Nifty / Sensex)

An index is a group of selected stocks that represents the overall performance of the market.

• Sensex = Top 30 companies on BSE
• Nifty 50 = Top 50 companies on NSE

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🔹 9. Broker / Brokerage

To buy or sell shares, you need a broker (like Zerodha, Upstox, Fyers). They charge a small fee called brokerage.

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🔹 10. Demat Account

A Demat account is where your shares are stored in digital form, just like a bank account stores money.

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🔹 11. Intraday Trading

Buying and selling a stock within the same day is called intraday trading.

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🔹 12. Delivery Trading

When you buy shares and hold them for more than a day, it’s called delivery trading.

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🔹 13. Futures and Options (F&O)

These are derivatives (contracts based on stock price):

• Futures: Agreement to buy/sell a stock at a future date at a fixed price.
• Options: Gives the right (but not obligation) to buy/sell at a set price.

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🔹 14. Volume

Volume means the number of shares traded in a particular stock in a day. Higher volume means higher activity.

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🔹 15. P/E Ratio (Price-to-Earnings)

This ratio shows whether a stock is overvalued or undervalued.
Formula: Share Price ÷ Earnings Per Share (EPS).

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🔹 16. Stop Loss

A stop loss is a risk management tool. You set a price level where your trade will automatically exit to limit losses.

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🔹 17. Circuit Limit

Stock exchanges put limits to prevent extreme ups and downs in stock prices in a single day. This is called upper circuit and lower circuit.

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🔹 18. Portfolio

Your collection of investments (stocks, bonds, mutual funds) is called your portfolio.

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🔹 19. Blue-Chip Stocks

Well-established, financially strong companies are called blue-chip stocks.
Example: HDFC Bank, Infosys, Reliance.

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🔹 20. Multibagger Stock

A stock that gives returns many times higher than the initial investment.

Example: Infosys in the 1990s turned into a multibagger for early investors.

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📌 Final Thoughts

Learning these basic stock market terminologies is the first step towards becoming a smart investor or trader. Once you are familiar with these terms, you’ll find it easier to read financial news, analyze companies, and make informed decisions in the market.