Essential Stock Market Terms

Hey there! Welcome to our big list of important words and ideas about money, stocks, and business in India. Whether you’re just starting to learn about investing or you’ve been doing it for years, this guide is for you.

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An example of how it’s used in India
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1. Margin Call

Definition: A demand from a broker that an investor deposit additional money or securities into their account when the value falls below the broker’s required minimum.
Example: Raj buys ₹1,00,000 worth of shares with ₹50,000 of his own money and ₹50,000 borrowed from his broker. If the stock value drops to ₹80,000, the broker may issue a margin call requiring Raj to deposit an additional ₹10,000 to maintain the required equity ratio.
Context: Margin calls are a risk of trading on margin (borrowed money). They can force investors to sell assets at inopportune times or add more capital.

2. Bull Market

Definition: A period of time when stock prices are rising or expected to rise.
Example: From 2003 to 2008, the Indian stock market experienced a strong bull run. The BSE Sensex rose from around 3,000 points to over 21,000 points during this period.
Context: Bull markets often coincide with economic growth and increased investor confidence.

3. Bear Market

Definition: A period of time when stock prices are falling or expected to fall.
Example: During the 2008 global financial crisis, the Indian stock market entered a bear phase. The BSE Sensex fell from over 21,000 points in January 2008 to around 8,000 points by October 2008.
Context: Bear markets can be triggered by economic downturns, geopolitical events, or market corrections.

4. Initial Public Offering (IPO)

Definition: The process of offering shares of a private company to the public for the first time.
Example: In 2022, Life Insurance Corporation of India (LIC) launched its IPO, raising ₹21,000 crore. It was the largest IPO in Indian history.
Context: IPOs allow companies to raise capital and provide an opportunity for early investors to realize gains.

5. Dividend

Definition: A distribution of a portion of a company’s earnings to its shareholders.
Example: Hindustan Unilever Limited (HUL) declares a dividend of ₹20 per share. An investor holding 100 shares would receive ₹2,000 as dividend income.
Context: Dividends are often seen as a sign of a company’s financial health and can be an important source of income for investors.

6. Market Capitalization

Definition: The total value of a company’s outstanding shares.
Example: If Reliance Industries has 1 billion outstanding shares trading at ₹2,000 per share, its market capitalization would be ₹2,00,000 crore.
Context: Market cap is used to classify companies as large-cap, mid-cap, or small-cap, which can indicate potential risk and growth prospects.

7. Blue Chip Stocks

Definition: Shares of well-established, financially sound companies with a history of reliable performance.
Example: Tata Consultancy Services (TCS), HDFC Bank, and Infosys are considered blue chip stocks in India.
Context: Blue chip stocks are often seen as safer investments, though they may offer lower growth potential compared to smaller, emerging companies.

8. NIFTY 50

Definition: A benchmark Indian stock market index that represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange (NSE).
Example: If the NIFTY 50 moves from 18,000 to 18,500 points, it indicates a general upward trend in the top 50 companies’ stock prices.
Context: The NIFTY 50 is widely used as an indicator of the overall health and performance of the Indian stock market.

9. Short Selling

Definition: The practice of selling borrowed shares with the expectation of buying them back at a lower price.
Example: An investor borrows 100 shares of Company X trading at ₹500 and sells them for ₹50,000. If the price drops to ₹400, the investor can buy back the shares for ₹40,000, returning them to the lender and pocketing ₹10,000 in profit (minus borrowing costs).
Context: Short selling is a speculative strategy that can yield high returns but also carries significant risks if the stock price rises instead of falls.

10. Limit Order

Definition: An order to buy or sell a stock at a specific price or better.
Example: An investor places a limit order to buy shares of Tata Motors at ₹400 when the current market price is ₹420. The order will only execute if the stock price falls to ₹400 or below.
Context: Limit orders help investors control the prices at which they trade but may result in missed opportunities if the stock price doesn’t reach the specified limit.

11. Price-to-Earnings (P/E) Ratio

Definition: A valuation ratio calculated by dividing a company’s stock price by its earnings per share.
Example: If Infosys is trading at ₹1,500 per share and has earnings per share of ₹50, its P/E ratio would be 30 (1500 ÷ 50 = 30).
Context: The P/E ratio is used to assess whether a stock is overvalued or undervalued relative to its earnings and compared to industry peers.

12. Circuit Breaker

Definition: A regulatory mechanism that temporarily halts trading on an exchange when a security or market experiences a severe price decline.
Example: If the BSE Sensex falls by 10% in a single day, trading on the Bombay Stock Exchange would be halted for 45 minutes to prevent panic selling.
Context: Circuit breakers are designed to reduce market volatility and give investors time to assimilate information during extreme market movements.

13. Futures Contract

Definition: An agreement to buy or sell an asset at a predetermined price on a specified future date.
Example: An investor buys a futures contract for 100 shares of Reliance Industries at ₹2,500 per share, to be delivered in three months. If the stock price rises to ₹2,700 at expiration, the investor profits ₹20,000 (₹200 x 100 shares).
Context: Futures are used for both speculation and hedging against price movements in the underlying asset.

14. Book Value

Definition: The net asset value of a company, calculated as total assets minus intangible assets and liabilities.

Example: If a company has total assets of ₹1,000 crore, intangible assets of ₹200 crore, and liabilities of ₹500 crore, its book value would be ₹300 crore (1000 - 200 - 500 = 300).
Context: Book value is used to evaluate whether a stock is overvalued or undervalued, especially in industries with significant physical assets.

15. Arbitrage

Definition: The simultaneous buying and selling of an asset in different markets to profit from price differences.
Example: An investor notices that shares of Tata Steel are trading at ₹500 on the NSE and ₹502 on the BSE. They buy 1000 shares on the NSE for ₹5,00,000 and immediately sell them on the BSE for ₹5,02,000, making a profit of ₹2,000 (minus transaction costs).
Context: Arbitrage helps to keep prices consistent across different markets and can be a low-risk way to profit from market inefficiencies.

16. Demat Account

Definition: An account that holds financial securities in electronic form, required for trading in the Indian stock market.
Example: Priya opens a demat account with her bank to hold shares of various companies she plans to invest in, such as Reliance Industries and HDFC Bank.
Context: Demat accounts have largely replaced physical share certificates in India, making trading more convenient and reducing risks associated with physical documents.

17. Sensex

Definition: The benchmark index of the Bombay Stock Exchange (BSE), composed of 30 of the largest and most actively traded stocks on the BSE.
Example: If the Sensex rises from 60,000 to 62,000 points, it indicates a general 3.33% increase in the value of its constituent stocks.
Context: The Sensex, along with the NIFTY 50, is one of the most widely tracked indicators of the Indian stock market’s performance.

18. Block Deal

Definition: A single trade with a minimum quantity of 5,00,000 shares or a minimum value of ₹10 crore, executed through a separate window on Indian stock exchanges.
Example: A mutual fund buys 10,00,000 shares of Infosys at ₹1,500 per share in a single transaction, totaling ₹150 crore.
Context: Block deals are often used by institutional investors to execute large trades without significantly impacting the market price.

19. Intraday Trading

Definition: The practice of buying and selling securities within the same trading day.
Example: Rahul buys 100 shares of TCS at ₹3,200 in the morning and sells them at ₹3,250 in the afternoon, making a profit of ₹5,000 (minus transaction costs) in a single day.
Context: Intraday trading is popular among short-term traders but carries higher risks due to market volatility.

20. Upper Circuit and Lower Circuit

Definition: Price limits set by stock exchanges to curb excessive volatility in a stock’s price during a trading session.
Example: If a stock has a 10% circuit limit and closes at ₹100, it can only trade between ₹90 (lower circuit) and ₹110 (upper circuit) the next day.
Context: Circuit limits are unique to the Indian market and help prevent extreme price movements due to speculation or panic.

21. Systematic Investment Plan (SIP)

Definition: A method of investing a fixed amount in a mutual fund at regular intervals.
Example: Anjali sets up a monthly SIP of ₹5,000 in an equity mutual fund, automatically investing this amount every month regardless of market conditions.
Context: SIPs are popular in India as they allow small investors to benefit from rupee cost averaging and long-term wealth creation.

22. Foreign Institutional Investor (FII)

Definition: An investor or investment fund registered in a country outside of India, investing in Indian financial markets.
Example: A US-based pension fund invests ₹500 crore in various Indian blue-chip stocks.
Context: FII activity is closely watched in India as it can significantly impact market trends and the value of the rupee.

23. Angel Investor

Definition: An individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.
Example: A successful entrepreneur invests ₹50 lakh in a promising fintech startup for a 10% stake in the company.
Context: Angel investors play a crucial role in India’s growing startup ecosystem, often providing early-stage funding before venture capital firms get involved.

24. Derivatives

Definition: Financial instruments whose value is derived from the value of underlying assets such as stocks, bonds, commodities, or market indices.
Example: An investor buys a Nifty 50 futures contract, betting on the direction of the entire index rather than individual stocks.
Context: The National Stock Exchange of India (NSE) is one of the world’s largest derivatives exchanges by volume.

25. Qualified Institutional Buyer (QIB)

Definition: Institutional investors considered to be more knowledgeable and better able to assess the risks and merits of various investment opportunities.
Example: A large insurance company participates in an IPO’s QIB quota, purchasing shares worth ₹100 crore.
Context: In Indian IPOs, a certain percentage of shares (usually 50%) is reserved for QIBs to ensure stability and credibility of the issue.

26. Promoter Holding

Definition: The percentage of a company’s shares owned by its promoters (founders or majority stakeholders).
Example: The Ambani family holds a 50.6% stake in Reliance Industries, which is considered the promoter holding.
Context: Promoter holding is closely watched in India as it can indicate the promoters’ confidence in the company and affect stock price movements.

27. Bonus Issue

Definition: A corporate action where a company issues additional free shares to its existing shareholders in proportion to their current holding.
Example: TCS announces a 1:1 bonus issue, meaning shareholders will receive one additional share for each share they currently own.
Context: Bonus issues are common in India and are seen as a way for companies to reward shareholders and increase liquidity of the stock.

28. Rights Issue

Definition: An offer to existing shareholders to purchase additional shares at a discounted price.
Example: Bharti Airtel announces a rights issue allowing shareholders to buy one new share for every 14 shares held, at a price of ₹535 per share when the market price is ₹600.
Context: Rights issues are used by companies to raise capital while giving existing shareholders the opportunity to maintain their proportional ownership.

29. Asset Management Company (AMC)

Definition: A company that invests pooled funds from clients, often in the form of mutual funds or exchange-traded funds.
Example: HDFC AMC manages over ₹4 lakh crore in assets across various equity, debt, and hybrid mutual fund schemes.
Context: AMCs play a significant role in the Indian financial landscape, offering professional management of investments to retail and institutional investors.

30. Market Maker

Definition: A firm or individual who actively quotes two-sided markets in a security, providing bids and offers along with the market size of each.
Example: A designated market maker for Infosys shares continuously provides buy and sell quotes, ensuring liquidity in the stock.
Context: While less common in the Indian equity market compared to some international markets, market makers are crucial in maintaining liquidity in certain segments like corporate bonds and some less liquid stocks.

31. Non-Convertible Debenture (NCD)

Definition: A type of debt instrument that cannot be converted into equity shares of the issuing company.
Example: Shriram Transport Finance Company issues NCDs with a face value of ₹1,000 each, offering an interest rate of 8.5% per annum for a 5-year tenure.
Context: NCDs are popular among investors seeking fixed returns, often offering higher interest rates than bank fixed deposits.

32. Commercial Paper (CP)

Definition: An unsecured, short-term debt instrument issued by corporations, typically for financing short-term liabilities.
Example: Reliance Industries issues commercial paper worth ₹500 crore with a 90-day maturity at an interest rate of 5.5% per annum.
Context: CPs are widely used by large corporations in India for short-term funding needs and are considered relatively low-risk investments.

33. Certificate of Deposit (CD)

Definition: A savings certificate with a fixed maturity date and specified fixed interest rate, issued by banks.
Example: ICICI Bank issues a 1-year CD with a face value of ₹1 lakh, offering an interest rate of 6% per annum.
Context: CDs typically offer higher interest rates than regular savings accounts and are popular among institutional investors in India.

34. Qualified Institutional Placement (QIP)

Definition: A method by which listed companies can raise capital by issuing equity shares or securities to Qualified Institutional Buyers.
Example: Axis Bank raises ₹10,000 crore through a QIP, issuing shares to large institutional investors at ₹420 per share.
Context: QIPs allow companies to raise funds quickly with fewer regulatory requirements compared to other equity issuance methods.

35. Alternative Investment Fund (AIF)

Definition: A privately pooled investment vehicle that collects funds from sophisticated investors for investing in accordance with a defined investment policy.
Example: A venture capital AIF raises ₹500 crore to invest in early-stage technology startups in India.
Context: AIFs in India are regulated by SEBI and cater to high net-worth individuals and institutional investors looking for diverse investment opportunities.

36. Buyback

Definition: A corporate action in which a company repurchases its own shares from the open market or shareholders.
Example: TCS announces a buyback of up to 4 crore shares at ₹3,000 per share, representing 1.08% of its total paid-up equity capital.
Context: Buybacks are often seen as a way to return excess cash to shareholders and potentially increase the stock’s value.

37. Green Shoe Option

Definition: An over-allotment option that allows underwriters to sell additional shares if demand is high during an IPO.
Example: During its IPO, Zomato includes a green shoe option to sell an additional 15% of shares if there’s excess demand.
Context: The green shoe option helps stabilize the post-listing price of a stock by allowing underwriters to manage supply and demand.

38. Block Chain

Definition: A method of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.
Example: The National Stock Exchange (NSE) implements a blockchain-based e-voting system for listed companies to conduct transparent corporate governance processes.
Context: While primarily associated with cryptocurrencies, blockchain technology is being explored for various applications in the Indian financial sector.

39. Exchange-Traded Fund (ETF)

Definition: A type of investment fund and exchange-traded product, traded on stock exchanges, that tracks an index, sector, commodity, or other assets.
Example: The Nippon India ETF Nifty BeES tracks the NIFTY 50 index, allowing investors to gain exposure to India’s top 50 companies through a single investment.
Context: ETFs are gaining popularity in India as they offer a low-cost way to invest in a diversified portfolio of stocks or other assets.

40. Sovereign Gold Bond (SGB)

Definition: Government securities denominated in grams of gold, offered as an alternative to holding physical gold.
Example: The Reserve Bank of India issues Sovereign Gold Bonds at ₹5,000 per gram, with an eight-year tenure and 2.5% annual interest rate.
Context: SGBs are part of the Indian government’s efforts to reduce the country’s reliance on physical gold imports and provide investors with a gold-linked investment option.

41. Real Estate Investment Trust (REIT)

Definition: A company that owns, operates, or finances income-generating real estate, allowing individual investors to earn dividends from real estate investments.
Example: Embassy Office Parks REIT, India’s first listed REIT, owns and operates a portfolio of commercial real estate assets, distributing rental income to unit holders.
Context: REITs provide a way for retail investors to invest in large-scale, income-producing real estate, a market previously accessible mainly to institutional investors in India.

42. Participatory Notes (P-Notes)

Definition: Financial instruments used by foreign investors who are not registered with SEBI to invest in Indian securities.
Example: A foreign hedge fund uses P-Notes to gain exposure to Indian equities without directly registering with SEBI, investing ₹100 crore in various blue-chip stocks.
Context: While P-Notes have been controversial due to concerns about the anonymity they provide, they remain a significant route for foreign investment in India.

43. Algorithmic Trading

Definition: The use of computer programs and algorithms to automatically execute trades based on pre-set criteria.
Example: A trading firm uses an algorithm to automatically buy shares of a company when its price falls below the 50-day moving average and sell when it rises above the 200-day moving average.
Context: Algorithmic trading is becoming increasingly common in India, with SEBI regularly updating regulations to ensure fair market practices.

44. Securities Transaction Tax (STT)

Definition: A tax levied on all transactions done on the stock exchanges in India.
Example: An investor pays 0.1% STT on the total transaction value when selling shares of Infosys on the NSE.
Context: STT was introduced in 2004 to stop tax avoidance of capital gains tax. It’s a significant factor in the cost structure of trading in India.

45. Qualified Foreign Investor (QFI)

Definition: An individual, group, or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards.
Example: A pension fund from Singapore, registered as a QFI, invests ₹200 crore in Indian government bonds.
Context: The QFI scheme was introduced to widen the class of foreign investors in the Indian capital market and improve the depth and breadth of the market.

46. Liquidity Adjustment Facility (LAF)

Definition: A monetary policy tool used by the Reserve Bank of India (RBI) to manage liquidity in the banking system.
Example: The RBI conducts a repo auction, lending ₹50,000 crore to banks at 4.5% interest rate for a 14-day period to address a liquidity shortage.
Context: LAF helps in maintaining stability in the financial system and influences short-term interest rates.

47. Market Capitalization to GDP Ratio

Definition: A measure used to determine whether an overall market is undervalued or overvalued compared to a historical average.
Example: If India’s total market capitalization is ₹200 lakh crore and its GDP is ₹250 lakh crore, the Market Cap to GDP ratio would be 80%.
Context: This ratio, often referred to as the “Buffett Indicator” in global markets, helps investors gauge the overall valuation of the Indian stock market.

48. Sectoral Indices

Definition: Stock market indices that track the performance of specific sectors of the economy.
Example: The Nifty Bank index includes 12 stocks from the banking sector, providing a benchmark for the performance of banking stocks in India.
Context: Sectoral indices help investors and analysts track and compare the performance of different sectors of the Indian economy.

49. Unified Payments Interface (UPI)

Definition: An instant real-time payment system developed by the National Payments Corporation of India (NPCI).
Example: An investor uses UPI to instantly transfer ₹10,000 from their bank account to their trading account to cover a margin call.
Context: While not strictly a stock market term, UPI has revolutionized payments in India, including in the financial services sector.

50. Securities Lending and Borrowing (SLB)

Definition: A mechanism that allows short selling of securities in the Indian market.
Example: A trader borrows 1000 shares of Reliance Industries through the SLB mechanism to short sell, anticipating a price decrease.
Context: SLB provides liquidity to the market and enables strategies like short selling and arbitrage.

51. Equity Linked Savings Scheme (ELSS)

Definition: A type of mutual fund that invests primarily in equities and offers tax benefits under Section 80C of the Income Tax Act.
Example: Ravi invests ₹1.5 lakh in an ELSS fund, reducing his taxable income by the same amount while gaining exposure to the equity market.
Context: ELSS funds are popular among Indian investors as they offer potential for capital appreciation along with tax benefits.

52. Depository Participant (DP)

Definition: An agent of the depository (NSDL or CDSL) that serves as an intermediary between the depository and the investors.
Example: ICICI Bank, acting as a DP, helps Priya open a demat account and facilitates her stock transactions.
Context: DPs play a crucial role in the dematerialized trading system in India, maintaining electronic records of investors’ securities.

53. Dividend Distribution Tax (DDT)

Definition: A tax previously levied on companies for the dividend paid to their shareholders. (Note: DDT was abolished in the Union Budget 2020 and dividends are now taxed in the hands of recipients)
Example: Before 2020, if a company declared a dividend of ₹100 per share, it would pay a DDT of ₹20.56 (including surcharge and cess), effectively reducing the dividend received by shareholders.
Context: The abolition of DDT and shift to recipient-based taxation was aimed at improving India’s attractiveness to foreign investors.

54. Arbitrage Mutual Fund

Definition: A type of mutual fund that aims to generate income by capitalizing on price differences of securities across markets.
Example: An arbitrage fund buys shares of Infosys on the NSE at ₹1,500 and simultaneously sells futures of Infosys on the BSE at ₹1,505, locking in a small profit.
Context: Arbitrage funds are considered relatively low-risk and are popular among investors looking for better returns than debt funds with lower risk than equity funds.

55. Offer for Sale (OFS)

Definition: A method for listed companies to sell shares through an exchange platform, typically used by promoters to reduce their stake.
Example: The Government of India sells a 5% stake in NTPC through an OFS, offering 412.27 million shares at a floor price of ₹145 per share.
Context: OFS is a popular method for disinvestment of public sector undertakings and for promoters to comply with minimum public shareholding norms.

56. India VIX

Definition: A volatility index based on the NIFTY Index Option prices, indicating the expected market volatility over the next 30 calendar days.
Example: The India VIX rises from 15 to 25, suggesting that the market expects higher volatility in the near future.
Context: India VIX is often referred to as the ‘fear gauge’ of the Indian market, helping investors assess market risk and sentiment.

57. Bharat Bond ETF

Definition: An exchange-traded fund that invests in bonds of public sector companies, launched by the Government of India.
Example: An investor buys units of Bharat Bond ETF with a 3-year maturity, effectively lending to a portfolio of PSU bonds with an indicative yield of 5.5%.
Context: Bharat Bond ETF provides retail investors access to corporate bond markets with the safety of PSU bonds and liquidity of exchange trading.

58. Equity Savings Fund

Definition: A hybrid mutual fund that invests in a mix of equity, debt, and arbitrage opportunities.
Example: An equity savings fund invests 30% in equities, 30% in debt instruments, and 40% in arbitrage opportunities, aiming for stable returns with moderate risk.
Context: These funds are designed to provide equity-like returns with lower volatility, appealing to conservative investors wanting some equity exposure.

59. Insider Trading

Definition: The illegal practice of trading in a company’s securities based on material, non-public information about the company.
Example: An employee of a pharmaceutical company buys a large number of company shares just before the public announcement of a successful drug trial, based on insider information.
Context: SEBI has strict regulations against insider trading to ensure fair markets and protect investor interests.

60. Systematic Transfer Plan (STP)

Definition: An investment strategy where money is transferred from one mutual fund scheme to another at regular intervals.
Example: An investor sets up an STP to transfer ₹10,000 monthly from a liquid fund to an equity fund, aiming to benefit from rupee cost averaging in the equity market.
Context: STPs are popular for gradually shifting investments from lower-risk to higher-risk funds or vice versa, depending on the investor’s goals.

61. T+1 Settlement

Definition: A settlement cycle where trades are settled one business day after the trade date.
Example: An investor buys shares of TCS on Monday. Under T+1 settlement, the shares will be credited to their demat account and the funds debited from their bank account by Tuesday.
Context: India is transitioning to T+1 settlement to improve market liquidity and reduce settlement risk.

62. Muhurat Trading

Definition: A special trading session held on Diwali by Indian stock exchanges to mark the beginning of the Hindu New Year.
Example: During the one-hour Muhurat Trading session, an investor buys 100 shares of Reliance Industries as a symbolic start to their investment for the new year.
Context: Muhurat Trading is a tradition unique to the Indian stock market, reflecting the cultural significance of Diwali in Indian business practices.

63. Participatory Notes (P-Notes)

Definition: Offshore derivative instruments used by foreign investors not registered with SEBI to invest in Indian securities.
Example: A foreign hedge fund uses P-Notes to gain exposure to Indian equities worth ₹500 crore without directly registering with SEBI.
Context: While P-Notes provide easier access to Indian markets for foreign investors, they have been subject to regulatory scrutiny due to concerns about the anonymity they provide.

64. Sharpe Ratio

Definition: A measure that indicates the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Example: A mutual fund with a Sharpe ratio of 1.5 is considered to be performing better than one with a ratio of 1.0, as it indicates a higher return for the same level of risk.
Context: The Sharpe ratio is widely used in India to evaluate the risk-adjusted performance of mutual funds and portfolio managers.

65. Unique Client Code (UCC)

Definition: A distinct identification code assigned to each client trading in the Indian stock market.
Example: When opening a trading account, Rahul is assigned the UCC “ABC12345” which is used for all his transactions across exchanges.
Context: UCCs help in maintaining transparency and preventing fraudulent activities in the Indian stock market.

66. Overnight Index Swap (OIS)

Definition: An interest rate swap where a fixed rate is exchanged for a floating rate based on a notional amount.
Example: A bank agrees to pay a fixed rate of 4.5% in exchange for receiving the overnight MIBOR (Mumbai Interbank Offer Rate) on a notional amount of ₹100 crore for one year.
Context: OIS rates are important benchmarks in Indian money markets and are used for pricing various financial products.

67. Unified Payments Interface (UPI)

Definition: An instant real-time payment system developed by the National Payments Corporation of India (NPCI).
Example: An investor uses UPI to instantly transfer ₹10,000 from their bank account to their trading account to cover a margin call.
Context: UPI has revolutionized payments in India, including in the financial services sector, making fund transfers for investment purposes quick and convenient.

68. Market Making

Definition: The process of quoting both buy and sell prices for a financial instrument to provide liquidity to the market.
Example: A designated market maker for Infosys shares continuously provides buy and sell quotes, ensuring that investors can trade the stock easily.
Context: Market making is crucial for maintaining liquidity in less frequently traded stocks on Indian exchanges.

69. Tri-Party Repo

Definition: A type of repo transaction where a third party (tri-party agent) acts as an intermediary between the borrower and the lender.
Example: A mutual fund lends ₹100 crore to a bank through a tri-party repo, with the Clearing Corporation of India (CCIL) acting as the tri-party agent.
Context: Tri-party repos have become an important tool for liquidity management in the Indian financial system.

70. Global Depository Receipt (GDR)

Definition: A bank certificate issued in more than one country for shares in a foreign company.
Example: Infosys issues GDRs on the London Stock Exchange, allowing UK investors to invest in Infosys shares without trading directly on Indian exchanges.
Context: GDRs provide Indian companies access to foreign capital markets and international investors exposure to Indian companies.

71. Carry Trade

Definition: An investment strategy where an investor borrows money at a low interest rate to invest in an asset that provides a higher rate of return.
Example: An investor borrows Japanese Yen at 0.5% interest and invests in Indian government bonds yielding 6%, profiting from the interest rate differential.
Context: Carry trades can impact currency valuation and are closely watched by the RBI for their effect on the Indian Rupee.

72. Regulatory Sandbox

Definition: A framework set up by a regulator that allows FinTech startups and other innovators to conduct live experiments in a controlled environment under regulatory supervision.
Example: A startup tests its blockchain-based KYC solution in SEBI’s regulatory sandbox before full-scale implementation.
Context: The RBI and SEBI have introduced regulatory sandboxes to foster innovation in the Indian financial sector while managing risks.

73. Unified Payments Interface (UPI)

Definition: An instant real-time payment system developed by the National Payments Corporation of India (NPCI).
Example: An investor uses UPI to instantly transfer ₹10,000 from their bank account to their trading account to cover a margin call.
Context: UPI has revolutionized payments in India, including in the financial services sector, making fund transfers for investment purposes quick and convenient.

74. Sovereign Gold Bond (SGB)

Definition: Government securities denominated in grams of gold, issued by the Reserve Bank of India on behalf of the Government of India.
Example: An investor buys Sovereign Gold Bonds worth 50 grams at ₹5,000 per gram, with an 8-year tenure and 2.5% annual interest rate.
Context: SGBs provide an alternative to holding physical gold and are part of the government’s efforts to reduce gold imports.

75. Bharat 22 ETF

Definition: An exchange-traded fund that invests in 22 stocks of Central Public Sector Enterprises (CPSEs), Public Sector Banks, and strategic holdings of SUUTI.
Example: An investor buys units of Bharat 22 ETF to gain exposure to a diverse portfolio of public sector companies and reduce reliance on actively managed funds.
Context: Bharat 22 ETF is part of the government’s disinvestment program and provides retail investors an opportunity to participate in public sector growth.

76. Account Aggregator (AA) Framework

Definition: A financial data-sharing system that allows individuals to share their financial information securely with third-party service providers.
Example: Rahul uses an Account Aggregator to share his bank statements and investment details with a loan provider, streamlining his loan application process.
Context: The AA framework, introduced by the RBI, aims to improve financial inclusion and make credit more accessible in India.

77. Unified Payments Interface (UPI) 123Pay

Definition: A service that enables feature phone users to make UPI payments without an internet connection.
Example: A rural farmer uses UPI 123Pay to make a payment for seeds by dialing a number and following voice instructions, despite not having a smartphone.
Context: UPI 123Pay is part of India’s efforts to expand digital financial services to all segments of the population.

78. Small Finance Bank (SFB)

Definition: A type of niche bank in India that provides basic banking services to underserved sections of the economy.
Example: Jana Small Finance Bank offers microloans to small businesses and accepts deposits from local communities in rural areas.
Context: SFBs play a crucial role in furthering financial inclusion in India by serving customers typically neglected by larger banks.

79. National Asset Reconstruction Company Limited (NARCL)

Definition: A government-backed bad bank that purchases and resolves non-performing assets (NPAs) from Indian banks.
Example: NARCL purchases ₹2,000 crore worth of bad loans from a public sector bank at a 15% upfront cash payment, with the rest paid as security receipts.
Context: NARCL, also known as the ‘bad bank’, is part of the government’s strategy to clean up banks’ balance sheets and revive credit growth.

80. Social Stock Exchange (SSE)

Definition: A platform for listing social enterprises and voluntary organizations to raise capital through various financial instruments.
Example: An NGO focused on rural education lists on the SSE and raises ₹10 crore through zero-coupon zero-principal bonds.
Context: The SSE, regulated by SEBI, aims to channel more capital towards organizations creating social impact in India.

81. Central Bank Digital Currency (CBDC)

Definition: A digital form of a country’s fiat currency, issued and regulated by the central bank.
Example: The Reserve Bank of India launches the Digital Rupee, allowing citizens to hold and transact in digital currency directly issued by the RBI.
Context: CBDC is part of India’s push towards digital finance and aims to reduce the cost of currency management while enabling real-time payments.

82. Tokenization

Definition: The process of replacing sensitive card details with a unique code (token) for secure digital transactions.
Example: Instead of storing her actual credit card number, an e-commerce platform uses a token to process Priya’s recurring monthly payments.
Context: RBI mandated tokenization for card transactions to enhance the security of digital payments in India.

83. Co-Lending Model (CLM)

Definition: A partnership between banks and non-banking financial companies (NBFCs) to extend credit to priority sectors.
Example: A public sector bank partners with a microfinance NBFC to provide loans to small farmers, with the bank providing 80% of the loan amount and the NBFC 20%.
Context: CLM aims to leverage the widespread presence of banks and the local expertise of NBFCs to improve credit flow to underserved sectors.

84. T+1 Settlement Cycle

Definition: A settlement system where trades are settled one business day after the transaction date.
Example: An investor buys shares on Monday and receives them in their demat account by Tuesday, with the corresponding amount debited from their bank account.
Context: India’s move to T+1 settlement aims to reduce market risk and improve liquidity, making it one of the fastest settlement cycles globally.

85. Regulatory Sandbox for FinTech

Definition: A framework that allows FinTech startups to conduct live experiments in a controlled environment under a regulator’s supervision.
Example: A startup tests its AI-based credit scoring model for small businesses in RBI’s regulatory sandbox before full-scale implementation.
Context: Regulatory sandboxes in India aim to foster innovation in financial services while managing risks and ensuring consumer protection.

86. Legal Entity Identifier (LEI)

Definition: A 20-character, alpha-numeric code that uniquely identifies legally distinct entities engaging in financial transactions.
Example: A large corporate borrower obtains an LEI before applying for a loan of ₹50 crore from a bank, as mandated by RBI for all large borrowers.
Context: LEI implementation in India aims to improve the quality and accuracy of financial data systems and better risk management.

87. Peer to Peer (P2P) Lending

Definition: A form of direct lending of money to individuals or businesses through online platforms that match lenders with borrowers.
Example: Through a P2P platform, Amit lends ₹50,000 to five different borrowers, each borrowing ₹10,000 for their small businesses.
Context: P2P lending in India is regulated by RBI and aims to provide an alternative source of finance for individuals and small businesses.

88. Gift City (Gujarat International Finance Tec-City)

Definition: India’s first operational smart city and international financial services center (IFSC).
Example: A foreign bank sets up a branch in Gift City to offer dollar-denominated loans to Indian companies, taking advantage of the special economic zone status.
Context: Gift City aims to position India as a global financial hub and compete with financial centers like Singapore and Dubai.

89. Open Credit Enablement Network (OCEN)

Definition: A credit protocol infrastructure that aims to democratize lending to micro, small and medium enterprises (MSMEs).
Example: A small retailer applies for a loan through his accounting software, which uses OCEN to connect with multiple lenders and get the best offer.
Context: OCEN is part of India’s efforts to create open digital ecosystems and improve credit access for underserved segments.

90. Fractional Ownership Platforms

Definition: Platforms that allow investors to own a small portion of high-value real estate or other assets.
Example: Through a fractional ownership platform, Sneha invests ₹10 lakh to own a 0.1% share in a commercial property worth ₹100 crore.
Context: Fractional ownership is gaining popularity in India as it allows retail investors to access high-value investment opportunities previously limited to wealthy individuals or institutions.

91. Unified Payments Interface (UPI) Lite

Definition: A feature that enables small-value transactions (up to ₹200) in a semi-offline mode through the UPI app.
Example: Ravi uses UPI Lite to quickly pay ₹50 for a cup of tea at a local stall, with the transaction processing instantly even in an area with poor internet connectivity.
Context: UPI Lite aims to reduce the load on banking systems and make small transactions faster and more convenient.

92. Zero-Hour Trading

Definition: The practice of allowing trading immediately at market opening, which in India usually refers to pre-market trading sessions.
Example: A trader places an order to buy shares of TCS at 9:00 AM, 15 minutes before the regular market session begins at 9:15 AM.
Context: Zero-hour trading provides early price discovery and allows investors to react to overnight news before regular trading hours.

93. Bharat Series (BH-series) Vehicle Registration

Definition: A vehicle registration series for personal vehicles that allows owners to avoid re-registration when moving between states.
Example: An executive who frequently relocates due to job transfers registers her new car under the BH-series, avoiding the hassle of re-registration in different states.
Context: While not directly a financial term, the BH-series impacts the auto finance sector and is part of broader efforts to streamline regulations in India.

94. Battery Swapping Policy

Definition: A policy framework that enables electric vehicle users to exchange discharged batteries for charged ones at swapping stations.
Example: An electric scooter driver swaps his depleted battery for a fully charged one at a station, paying only for the electricity consumed.
Context: This policy aims to promote electric vehicle adoption in India, impacting the auto and energy sectors and related financial instruments.

95. Fund of Funds for Startups (FFS)

Definition: A SEBI-registered fund that invests in other SEBI-registered Alternative Investment Funds (AIFs) which, in turn, invest in startups.
Example: The government-established FFS invests ₹100 crore in an AIF focused on deep-tech startups, which then invests in 20 promising companies.
Context: FFS is part of the Startup India initiative and aims to catalyze investments into the startup ecosystem.

96. Green Term Ahead Market (GTAM)

Definition: A market segment for trading in renewable energy certificates and electricity from renewable sources.
Example: A solar power producer sells 1 MWh of electricity on the GTAM platform to a corporate buyer looking to fulfill its renewable energy obligations.
Context: GTAM is part of India’s efforts to promote renewable energy and create a market-based mechanism for its trading.

97. Tolling Agreement

Definition: A contract between a power plant and a fuel supplier where the supplier provides fuel to the plant and receives electricity in return.
Example: A natural gas supplier enters into a tolling agreement with a power plant, providing gas and receiving a portion of the generated electricity to sell in the market.
Context: Tolling agreements are becoming more common in India’s power sector as a way to manage fuel supply risks and optimize power generation.

98. Production Linked Incentive (PLI) Scheme

Definition: A government initiative that provides incentives to companies on incremental sales from products manufactured in domestic units.
Example: A smartphone manufacturer receives a 6% incentive on the incremental sales of devices made in its Indian factory under the PLI scheme.
Context: The PLI scheme aims to boost domestic manufacturing and make Indian companies more competitive globally, impacting various sectors and related investments.

99. Digital Banking Units (DBUs)

Definition: Specialized fixed point business units providing digital banking products and services.
Example: A rural customer opens a savings account, applies for a loan, and receives financial advice through a DBU set up by a large public sector bank in his village.
Context: DBUs are part of India’s push towards digital financial inclusion, especially in underserved areas.

100. Regulatory Compliance Portal

Definition: A centralized online platform for businesses to identify and comply with various regulatory requirements.
Example: A fintech startup uses the Regulatory Compliance Portal to identify all the licenses and approvals it needs from different regulators like RBI, SEBI, and IRDAI.
Context: The portal aims to improve ease of doing business in India by simplifying regulatory compliance processes.

Cheers,

Sim