Glossary of Stock Market

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S

SEBI - Securities And Exchange Board Of India
The regulatory body for the investment market in India.

Saturday Night Special
A slang term used to refer to a surprise takeover attempt.

Sector Fund
An investment fund that makes investments solely in businesses that operate in a particular industry or sector of the economy.

Sensex
An abbreviation of the Bombay Exchange Sensitive Index (Sensex) - the benchmark index of the Bombay Stock Exchange (BSE). It is composed of 30 of the largest and most actively-traded stocks on the BSE.

Settlement Date
The date by which an executed security trade must be settled. That is, the date by which a buyer must pay for the securities delivered by the seller.

Share Capital
Funds raised by issuing shares in return for cash or other considerations.

Shareholder
Any person, company, or other institution that owns at least 1 share in a company.

Shares
A unit of ownership interest in a corporation or financial asset. The two main types of shares are common shares and preferred shares.

Short Sale
A market transaction in which an investor sells borrowed securities in anticipation of a price decline and is required to return an equal amount of shares at some point in the future.

Short Term
Holding an asset for short period of time.

Simple Moving Average - SMA
A simple, or arithmetic, moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods.

Small Cap
Refers to stocks with a relatively small market capitalization. It is a company with a market capitalization less than Rs 500 crore.

Spinoff
The creation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company.

Stop-Limit Order
An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached.

Stop-Loss Order
An order placed with a broker to sell a security when it reaches a certain price. It is designed to limit an investor's loss on a security position.

Support
The price level which, historically, a stock has had difficulty falling below.

Seed Capital
A small amount of capital provided to an entrepreneur, usually for product development; beta stage development, pilot projects, etc, not covering launch expenses, commercial production or marketing; typically provided by angel (venture) investors.

Selling Short
The reverse of the usual stock market technique, short selling is based on the anticipation that a particular security price will go down. The practice of short selling involves borrowing shares of a security from your broker and immediately selling them at the current price. Then as the price of that security declines, you buy back an equal number of shares on the open market and use them to cover the shares you borrowed from your broker, and make a profit. For instance, if you sell short 100 shares of XYZ Corporation at 50.00 a share and the price of the stock drops to 35.00, your profit is 15.00 a share, or 1500.00. Short sellers lose when the price of the stock ascends rather than descends. Theoretically, there is more risk involved with short selling because a stock price could continue to rise forever and the short seller's loss could be infinite. A stock purchased at 10.00 a share can, however, only fall to zero and that is the maximum loss that would be incurred. Not for the common investor, unless you are very sure of yourself. Carefully check all tips on short sales before deciding to act on them.

Settlement
The process of paying for stocks you purchase, or receiving credit from your broker for the stocks you sell. Most stock transactions must be settled within three business days.

Shares
A unit representing a measure of ownership in a corporation.

Shareholder
A person who buys stock in a corporation, and therefore becomes a part owner of the corporation. This does not mean you should walk into a Reliance office and ask for a glass of water. You will get the water as a matter of courtesy, but it will be accompanied by some odd looks.

Shareholders Equity

The difference between the totals of assets and liabilities shown on a company's balance sheet.Book value is the shareholders equity divided by the number of outstanding shares.

Short Covering
Buying stock to return stock previously borrowed to make delivery on a short sale.

Short Position
Stock options, or future contracts sold and not covered as of particular date. Short position also means the total amount of stock an individual has sold short and has not covered, as of a particular date. Most stock exchange have a rigid rules regarding short selling. The player should ascertain these rules from a registered broker of the exchange.

Short Sale
To sell a stock you do not currently own. To go short you "borrow" stock from the broker/dealer, then sell the stock, with the intent to buy the stock back at a lower price than you had initially sold it for. A short sale can only take place on an "up tick"" or 'zero-plus tick'.

Short-term Gain
The profit realized from the sale of securities or other capital assets held twelve months or less.

Short-term Debt
Borrowing that must be repaid within one year.

Short-term Investments
Stocks and other liquid securities.

Solvency Ratio
Equity excluding minority interests as at year-end as a percentage of liabilities and equity at year-end.

Speculators
Investors who seek large capital gains through relatively risky investments.

Split
An increase in the number of shares outstanding. This increase in the number of shares result in the proportionate decrease of share price. For example, a company declares a "3 for 1 " stock split, the price of the stock is currently 60 a share, a shareholder with 100 shares before the split would have 300 shares after the split with a value of 20 a share. The shareholders equity does not change. A reverse split is where the total number of shares is decreased and the stock price increases proportionally. As in a split the total stock holders equity remains the same.

Spot Trading
Trading in commodities that will be delivered immediately. (Also called cash trading)

Spread
The spread is the difference between the bid price and the offer price.

Standard Deviation
A measure of a mutual fund or stock's historical volatility.

Stock Certificate
The actual document that is evidence of stock ownership, usually watermarked and patterned to make it hard to forge.

Stock Option
Contract allowing holder to buy or sell given number of shares of a particular stock at a given price by a certain date.

Stock Split
An increase in the number of outstanding shares in a corporation. This is usually n\brought about by the division of existing shares. For examples, a two-for-one split means that shareholders will receive two new shares for each old share, making a total of three. Alternately, a reverse stock split brings about the decrease in the number of shares in a corporation.

Stop Loss Order
An order placed with a "trigger price". It is placed to minimize the losses and the order cab be either for a purchase or a sale.

Stop Order
An order to buy or sell a security conditioned on a specific price. This order is very often referred to as a "stop loss" order, because it prevents the security from falling below a certain price.

Stops
Can be either a buy or a sell stop. A buy is placed above current prices and a sell is placed above current prices and a sell is placed below current prices.These order types instruct the broker to execute at market once a specific price level is reached and traded at.

Sub-accounts
A sub-account includes institutions (established or incorporated outside India ) and those funds, or portfolios (established outside India ) whether incorporated or not and corporate and individuals on whose behalf investments are proposed to be made in India by a Foreign Institutional Investor. NRIs and overseas Corporate Bodies (OCB) are not eligible for registration as sub-accounts. There are two categories of sub-accounts :
(1) broad-based/proprietary sub-accounts which are allowed to individually invest up to 10% of the total issued capital, and
(2) Foreign corporate and foreign individuals who are not allowed to exceed 5 percent of the issued capital.

Support
Historical price level at which falling prices have stopped falling and either moved sideways or reversed direction; usually seen as a price chart pattern

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