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Stock market terms

-By Aryan

1) IPO

IPO stands for initial public offering. When a company’s shares are available to be traded freely for the first time through an exchange in the stock market, then it is called an IPO.

The main aim of the company is to raise capital through an IPO and help the company grow in the long run.

The first IPO in India was in March 1602 when the Dutch East India company offered the shares to the public in order to raise capital

2) Bull market

Bull market is a market condition when there is an uptrend in the market or in simple terms, the prices of the stocks and the market itself are rising. This market situation brings faith in the minds of investors that the stocks will continue to rise in the long run.

A rise in the market index is a good indicator for the market to be in a ‘Bull’ situation

3) Bear market

Bear market is a market condition when there is a downtrend in the market. This implies that the prices of stocks in the market are continuously falling and people generally tend to sell their shares in this time period. For example, in March 2020, the covid-19 impact had put the market in the ‘Bull’ and there were negative sentiments in the minds of investors and traders

4)Short selling

When an investor wants to earn money in a bear market, then he does short selling.

This can be done by putting a sell position at a given market price (say $100) and then if the price fall (say $80), then he buys that share. By doing this way he can have a profit of $20 and that share as well. This is generally done when an investor feels that price of a particular stock is expected to fall in the future

5) Demat account

Demat account is an account that stores securities in an electronic form. There was a time when securities were bought and sold on the market floor where the shares were traded in paper form, but nowadays, the whole process has gone online!

In India, there are two depositories that maintain our Demat account. They are the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).