the beginner's guide to finance! p:1

Ever wondered what those weird intimidating words they use on those news channels and business magazines mean? Ever left scratching your head while a finance technical jargon is used by ‘Sharma ji ka Ladka’? Well, let’s solve that now! We bring to you a simplified meaning to all those words!

1. NIFTY

It is the stock index from THE NATIONAL STOCK EXCHANGE (NSE). Established in 1992, NSE was the first demutualised exchange in the country to provide a modern, fully automated screen based electronic trading system which offered easy trading facility to traders spread across the length and breadth of India.

INDIAN INDEX SERVICES AND PRODUCTS LIMITED (IISL) owns NIFTY.

Rhyme it: NIFTY 50 (National + fifty = NIFTY)

The word ‘fifty' is used because the index consists of 50 actively traded stocks from 21 sectors.

2. SENSEX

Index from THE BOMBAY STOCK EXCHANGE (BSE) representing a group of top companies averaged out in 30. The job of SENSEX is to provide an idea of how the stocks are performing on an average-over both short term and long term.

The oh- so- SENSITIVE INDEX- SENSEX

SHUT UP AND BOUNCE: If the Sensex or Nifty is up, on average, most stocks are gaining and the opposite is true when these indices collapse.

3. BULLISH AND BEARISH MARKET

Wondering how the bulls and bears just crept into the stock market? Well, their actions resemble those of the investors. The investors when anticipate a rise in the prices or try to raise the market prices resemble the striking image of a bull who strikes his horns upwards. These investors eventually turn the market into a bullish market. On the other hand, when the investors anticipate a fall in the prices or try to bring the market prices down, they resemble the heavy paw of the bear which curbs the things under it. These investors eventually turn the market into a bearish market.

4. MARKET CORRECTION

Ever received some extra pocket money on your birthday? Sometimes, the stock market will experience short-tern gains, even though nothing has really changed. These increases in value are usually due to mass psychology on the part of investors driven by anticipation of perceived gains. As more investors buy into the trend, the price increases. Once the price is high enough, buying slows, and some investors begin to sell to lock in their gains. This decrease in price, following a short-term increase, is called a market correction.

5. SHARES AND STOCKS

Shares are nothing but the number of units into which the capital/stocks of a company is divided in parts. Likewise, stocks are the ownership of a company divided in percentage. To put it simply, all the shares of a company combined form the stock.

Ps: A shareholder and a stockholder mean one & the same thing.

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Source: Google, Investopedia